September unemployment rate declined to lowest level since 1969

The Conference Board’s Consumer Confidence Index rose to 138.4 in September, which is up from 134.7 in July, and is the highest level since October 2000.

That’s not surprising. The economy added 134,000 jobs in September, bringing the 12-month total increase to 2.54 million—an acceleration over the full-year 2017 increase of 2.19 million new jobs. It also exceeds the 2016 total of 2.34 million new jobs.

The September unemployment rate declined from 3.9 percent to 3.7 percent, its lowest level since 1969. The improvements have been broad-based from a geographic perspective. Unemployment rates now are lower than year-ago readings in 83 percent of the 388 metropolitan areas the Bureau of Labor Statistics tracks.

In addition, the U-6 unemployment rate settled in at 7.5 percent in September, reflecting a 1.1 percentage point decline over the previous year.

The U-6 rate includes everyone who is unemployed, those who are employed part time but who’d prefer to work full time, and those marginally attached to the labor force.

Most important, the number of people who are underemployed (the part-timers in the U-6 data) has declined by about 825,000 over the past year.

The difference between the headline and U-6 rates (3.8 percentage points) is now below the long-run average reading, which is closer to four percentage points. That’s a clear reflection of labor market health.

Strong labor markets have translated to modestly higher pay for many workers. Average hourly earnings are up 3 percent in the past year, which means they’re keeping pace with inflation.

The Census Bureau reports that inflation-adjusted median household income increased 1.8 percent in 2017 to $61,372. This is the third-consecutive annual increase in median household income.