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Here's why we should be thrilled the unemployment rate is rising

Shane Ferro   

Here's why we should be thrilled the unemployment rate is rising
Stock Market1 min read

It's counterintuitive, but today's slight rise in the unemployment rate in the jobs numbers to 5.7% from 5.6% is a really good thing.

Remember, the unemployment rate calculation only counts people who are unemployed and looking for jobs.

If you're not looking for a job, then you're not part of the labor force.

So, when the economy is adding jobs, but the unemployment rate rises, that means people who didn't have a job weren't looking for work are now returning to the labor force and looking.

The labor force participation rate rose to 62.9% from 62.7% in January. This number comes from the household report, which saw a 759,000 increase in employment but a 1,051,000 surge in the number of folks in the labor force.

Labor force participation has been falling for a long time. That's partially a demographic trend, from baby boomers retiring, but it was accelerated by the Great Recession and hasn't yet recovered. This is what it looked like up to and including January's report:

Screen Shot 2015 02 06 at 9.07.57 AM

St. Louis Fed

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