Free Markets, Free People


The jobs report

A good job report this month drops the “official” unemployment rate to 8.3%.  That, of course, will be touted as significant progress and, on one level, it is.  The number of jobs created is above the maintenance level.  That means a real net gain.

But there are some underlying numbers that are much less positive.

While the job creation is “well above expectations”, there’s another record that masks the real unemployment number.

Namely 1.2 million workers (another record) fell out of the labor force.  That’s one reason the official rate looks good. 

And, probably the most important number to be considered – the labor participation rate – fell to 63.7% which is a 30 year low and reflects the loss of those 1.2 million workers from the work force.  Neither of those numbers are good.

That said, the report on the numbers of jobs created is a good report and may signal some growth. It is, for a change, above the maintenance level of jobs.   But you have to keep in mind that in overall terms, and despite the official numbers, the job situation still has a very, very long way to go.

~McQ

Twitter: @McQandO

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25 Responses to The jobs report

  • Under Obama, the United States has suffered the steepest drop in private investment since data were kept, as well as the slowest recovery.

    http://pjmedia.com/spengler/2012/02/02/obama-the-great-divider-literally/

    But it is all a Teahadist conspiracy…that involves investors from all over the world agreeing to withhold their money to stick it to the First Black President…

    or something…

  • I’ll believe this month’s job numbers next month – right now from what I’m consistently seeing, they’ll be (quietly) adjusted downward at a later date.

    • @looker they don’t have to revise all that much. As ZH points out, at this pace of people dropping out of the workforce they’ll have a negative unemployment rate come election day. Of course, if you’re one of those people who dropped out you’ll know and if you cast you’re vote based on this then the Obama adminstration is decieving itself.

      • @tkc882 Not a problem, I fondly remember the last Democratic nomination, when I discovered on that blessed day, that my rent, and my gas, were going to be paid for because Barack Hussein Obama was the candidate for President. So too it shall come to pass, and the oceans will recede, and the climate shall cool and all manner of goodness and light shall flow forth from the banks of the Potomac to the farthest corner of the 57 states.

        • @looker Not much different from Obamacare giving the Democrats a lock on power for a generation.

      • @tkc882 @looker I cynically suggested a while back that the Reps should extend unemployment benefits from 99 weeks to 104 weeks. How could the Dems disagree ?

        This will allow us to see exactly who is retired and who is discouraged.
        The discouraged (and probably many of the retired) will temporarily return for 5 weeks of unemployment checks raising the unemployment number up to more realistic values.

    • @looker Here’s a scary-ass chart for you…

      http://pjmedia.com/vodkapundit/files/2012/02/Labor-Force-Part-Rate.jpg

      Talk about Obama being the most divisive President in history!

  • Implied Unemployment Rate Rises To 11.5%, Spread To Propaganda Number Surges To 30 Year High
    http://www.zerohedge.com/news/implied-unemployment-rate-rises-115-spread-propaganda-number-surges-30-year-high

    This has the potential to bite the administration in the arse. They’ll go around talking up the declining unemployment number as proof of the success of their economic policy. But reality trumps propaganda and if you’re one of those millions that gave up and dropped out of the work force then how likely are you going to be to believe the administration’s claims, much less vote for them based on those claims.

    Considering Obama’s propensity for taking ideology over reality, this could go very badly for him.

    Of course, his apologists will bleat that he doesn’t get the credit because he is black. Again, that is not going to go over well with someone who has been out of work for a long time.

    • @tkc882 In January, the number of Part Time workers rose by 699K, the most ever, from 27,040K to 27,739K, the third highest number in the history of this series. How about Full time jobs? They went from 113,765 to 113,845. An 80K increase. So the epic January number of 141.6 million employed, which rose by 847K at the headline level: only about 10 % of that was full time jobs.

      Only 10% were full time jobs.

  • Didn’t the CBO just tell us the actual rate was closer to 10+% at the beginning of the week?

  • “Obama said he had a message for Congress–pass the payroll tax cut and unemployment insurance extension without “drama” or delay. “Do not slow down the recovery we’re on now. Don’t muck it up,” he said.”

    • @Neo_ With the expectation they won’t do as he asked, and the expectation that he’ll be able to blame them for mucking it up. He’s a clever little doggie.

      • @looker Best comeback …
        “People have been telling me that you don’t know the first thing about economics … now you have proven them right.”

  • I don’t dispute the numbers, but I am really curious what they mean. What exactly are the people who have dropped out of the workforce doing? Since self-employment is not counted in the unemployment numbers and people who stop looking for work because they become self-employed are not specified, I am certain some number of individuals have gone in this direction. But I have no idea whether it is a significant number. We know that the Baby Boomers began to turn 65 last year, so we have a workforce that a little top heavy agewise. I wonder how many of those dropping off the rolls are taking either an early retirement or living off of retirement resources temporarily. Of course a number of those people who are eligible might be taking advantage of the temporary assistance of the TANF program, but through 2010, even as unemployment increased by 88%, TANF caseloads only increased by 14%. We have certainly seen a dramatic rise in Foodstamps, some 30% by the end of 2010, so I am sure this represents a portion of the unemployed and underemployed.

    I was suprised to see the downtick in unemployment, but it makes more sense with the dropping out numbers. For years, our economy was bolstered by spending based on home equity loans and an almost tripling of new home construction employment. Neither of those are going to be replaced any time soon, and in the case of home equity, we hope we can recover without that ever coming back. I figured 10% was going to be the new normal for a while, and behind the numbers, it probably is. But that doesn’t mean the economy is not improving, but without the false income of real estate growth, I doubt it can grow at lrevious levels without some other kind of bubble.

    • @CaptinSarcastic These numbers mean nothing, and they like it that way.

    • @CaptinSarcastic,

      Actually, self employment is included in theunemployment number. The unemployment number comes off the household survey, while the number of new jobs comes off the establishment survey.

  • The only thing that should be surprising about this level of duplicity from the Obama administration is that anybody is still surprised by it. Of course, the press, which wouldn’t know the inside of an employment report, generally speaking, …..(Unless there were a Republican, and particularly a conservative in the White House)… is playing along here.

    This administration has been nothing short of that disaster in terms of employment, and economic well being. And yet the Obama administration is bent on projecting itself as the defender of the middle class… And the only true path to growth in the economy. And the press its willing accomplice is playing along.

    The really sad part is that I don’t see Romney as being any better.

    • @Eric Florack Neither do I.
      I see that Allen West said …
      “Can someone tell me how employment in the black community has improved at a rate three times the national average in just a few months?? With numbers like today, urban communities should be well on their way to economic recovery then! There is something suspicious about the job numbers released today and it has me very concerned,” West wondered Friday. “Is this dramatic supposed decrease in black unemployment a result of job creation or is someone playing around with the census numbers??”
      http://thehill.com/blogs/blog-briefing-room/news/208613-rep-west-responds-to-jobs-report-someone-messing-with-census-numbers
      The Hill couldn’t seem to find economists who had any better understanding of these numbers.

    • @Eric Florack Remember the day in the W admin when 5% unemployment was a nightly scandal…???

      And THAT was with a MASSIVELY larger work force.

  • “total non-farm payrolls rose by 243,000 in January and the unemployment rate decreased to 8.3 percent.”

    Those 243,000 jobs are the total after seasonal adjustments.

    The question you should be asking is, what’s the un-tampered-with number before the adjustment?

    Glad you asked. The Labor Department reported a loss of 2,689,000 jobs in January.

    • @Neo_ If this were the first time that seasonal adjustment ever took place, you’d have a point, but since it’s done this way every January, the numbers are much better indicator that if all of sudden we STOPPED doing seasonal adjustments. I am sure politically, that is what one side wants people to focus on. But the seasonal adjustments is a valid accurate way to create a monthly number as part of any trending analysis. This is nothing new. The unemployment rate was seasonally adjusted for the Holiday season as well, and there were fringies out there crying that the employment looked BETTER than the adjusted numbers indicated. Any number, when tortured enough, will admit to anything.

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