Now that we know something about the composition of the employment gain, we can start to look into what happened to unemployment. Just so you know, it is possible for the number of people employed and the number of people who are unemployed to increase at the same time. That’s why we showed you the breakdown of the numbers on Chart 22. And for an example of just such an event, please look at what happened last month.

Anyway, we see a drop in the unemployment rate this month for what we call “the right reason”. People got jobs at a pace faster than the labor force expanded.

But this is not the end of the story. In fact, it’s where we start looking at the rest of the criteria for whether the current letter of grade of A will hold.

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