What this actually is
The share of people who want a job, have looked for one in the past four weeks, and do not have one. It comes from a household survey, not the business survey that produces payrolls, which is why the two sometimes disagree.
Why it matters to a person
It is the most politically potent economic number, and the one half of the Fed's mandate is written around. For an individual it is the difference between a job market where you can leave and one where you cannot.
For scale
3.4% in early 2023 — the lowest since 1969. 14.8% in April 2020. 10% in 2009. The Sahm rule observes that whenever the three-month average rises half a point above its twelve-month low, a recession has already begun; it has worked every time since 1970, though its own author has cautioned that a labour force growing through immigration can trip it without a downturn.
How to read a release
Reading it
The level matters less than the direction and speed. A rate rising for the right reason (more people entering the workforce) is different from one rising for the wrong reason (layoffs), and the participation rate tells you which.
The mechanism
A 0.5pp rise from the low has coincided with every recession since 1970.
What to watch: U-3; 3-month average versus 12-month low. Arrives monthly; the effect typically lasts months. Impact tier 2 — Directional: Moves the index for days or weeks. Scheduled data releases, policy decisions, global spillovers, and the prices of money and energy. This is the tier most professional attention is spent on.
Its neighbourhood
Everything this entry connects to directly. Click any point to follow it.
What it moves next
Documented transmission: when this moves, these tend to move after it.
What moves it
Dials it feeds
This factor is one input to a composite reading on the Analytics page.