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Making Sense of Unemployment Data

Whether in a classroom setting, at a public event or community meeting, working a media relations angle or just doing a quick office visit, we often encourage real estate professionals (or anyone with an income reliant on the health of a consumer-driven marketplace, really) to monitor not only the housing market but also the labor market. Why, you ask? Because unemployed people don’t tend to buy houses (at least not anymore). So if your goal is to forecast market health, identify opportunities and avoid risks, it’s important to assess the health of not only the market, but also of the consumer and household.

Some of you may already be reciting: “The unemployment rate is a poor measure of labor market health because it doesn’t count those who are no longer looking for work.” That’s a reasonable critique and there are always improvements to be made, but that’s how the rate has been measured for decades. The methodological outrage, by contrast, is a far more recent phenomenon.

At any rate(!), the Federal Reserve bank of St. Louis recently published a paper that can help make sense of unemployment data. 

It’s also worth noting that the Twin Cities metro area has one of the lowest unemployment rates of any major metro area.

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