On CNBC’s “The Exchange” on Friday, Mark Zandi, chief economist at Moody’s Analytics, said the rising unemployment rate despite job creation is “because we have strong labor force growth and a lot of immigrants coming into the country looking for work.”
Zandi said he believes the economy’s potential growth rate is much higher than most people think. “Real GDP growth through the second quarter of this year was 3 percent year-on-year. But the unemployment rate has risen by 0.5 percentage points over the past year. That means the economy’s potential growth rate, which corresponds to enough jobs to maintain stable employment, is much higher,” he said.
He added, “Right now, we’re over 3 percent because labor force growth is booming. A lot of immigrants are coming into the country and getting jobs. So labor force growth is 1.5 to 2 percentage points instead of the usual half a point. Productivity growth, I don’t know if it’s sustainable, but it’s probably close to 2 percent right now. So, if you do the math, if you add labor productivity growth and labor force growth, it’s well over 3 percent. That’s consistent with the data, that’s consistent with the rise in unemployment. It’s also consistent with the fact that we’re creating a ton of jobs every month. If you asked me two years ago what would happen to the unemployment rate if we were creating 150,000, 200,000 jobs a month, I would have said it would go down, not up.”
Zandi further stated that the economy is at full employment.
to follow Ian Hanchett’s Twitter Ian Hanchett
