An alternative measure of labour market slack developed by the Federal Reserve that broadens the standard unemployment rate to include marginally attached workers and those working part-time for economic reasons. U-Star (sometimes written U*) provides a more comprehensive view of underutilisation in the labour market than the headline U-3 unemployment figure. Traders and economists monitor U-Star to better gauge the true tightness of the job market and its potential implications for wage growth and Federal Reserve policy.
Example
“While the headline unemployment rate stood at 3.8%, U-Star indicated broader labour underutilisation at 7.2%, suggesting more slack than the official figure implied.”