Correlation: Employment-Population Ratio Vs. Real GDP Per Capita
Contrarian, Arbitrage, Commodities, Gold & Precious Metals
Seeking Alpha Analyst Since 2011
I like statistics that can't be fudged by the government and this is one of them: The Civilian Employment-Population Ratio. This measure is one of the best to evaluate the labor market. Each time when this ratio declines, we enter a recession. So this is a very good gauge in predicting bad periods in the overall economy.
A high ratio (above 70%) means that a lot of people are employed and this will result in a high GDP per capita. A low ratio (under 50%) is considered bad for GDP.
If we take a look at the percentage change per annum, we see that the trend for the employment-population ratio is down (blue chart). So the employment picture isn't improving and this translates into a declining real GDP per capita growth rate (red chart).
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