Paul Krugman writes:
I’ve been using the employment-population ratio rather than the unemployment rate as an indicator of labor market conditions; the unemployment rate has been fairly low, roughly late-90s levels, but employment-population has never regained its late-90s peak.
But which measure corresponds most closely to how people feel about the economy? A plot of e-p ratio (red, right scale) versus the percentage of Americans saying that the economy is good or excellent (blue, left scale) (June and December data only):
The EP ratio seems to track public sentiment pretty well. Going by the unemployment rate, people should have felt as good about the economy in 2007 as they did in 1998-1999. Some people blame the liberal media; I think people were reacting to the reality of the situation.