On Friday’s broadcast of CNBC’s “The Exchange,” Moody’s Analytics Chief Economist Mark Zandi stated that unemployment rates have ticked up despite job creation “because labor force growth is booming, because we have a lot of immigrants coming into the country taking jobs.”
Zandi said that he thinks the economy’s potential rate of growth is much higher than most people think and “If you look at year-over-year real GDP growth through the second quarter of the year, 3% growth. But yet, over that past year, the unemployment rate has risen a half a percentage point. So, that would suggest the economy’s potential, that rate of growth, which is consistent with enough jobs to maintain stable employment, is a lot higher.”
He added, “Right now it’s higher than 3% because labor force growth is booming, because we have a lot of immigrants coming into the country taking jobs. And so, labor force growth isn’t what it typically is, a half a point, it’s one and a half to two percentage points. And productivity growth, I don’t know if it’s sustainable or not, but right now, productivity growth probably also is close to 2%. So, you do the arithmetic, labor productivity growth plus labor force growth, we’re well over 3%. And again, that’s consistent with the data, that’s consistent with the rise in unemployment, it’s also consistent with the fact that we’re getting a boatload of jobs every single month. And if you’d asked me two years ago if you were getting 150, 200,000 jobs a month, what would be happening with unemployment? I’d say it’d be going down, not up.”
Zandi further stated that the economy is at full employment.
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