A report from the White House claims that unemployment is at 4.9%, while Donald Trump asserts that the real unemployment rate is 42%. FiveThirtyEight staffer Ben Casselmen builds his own model to figure out what the real unemployment rate is in America.
Casselman takes a look at the the number of discouraged workers as well as the labor force participation rate which is at a three-decade low. According to his estimate, there are 1.5 million Americans that should be in the workforce, this leads him to calculate that the real unemployment rate is actually 5.8%:
The difference between 4.9 percent and 5.8 percent is small but significant. Many economists consider 5 percent to be a rough long-term floor for the unemployment rate (other economists think the floor is lower); unemployment can’t drop much below that threshold without triggering inflation.