Free Markets, Free People

unemployment rate


ICYMI

Of course “ICYMI” is internet shorthand for “In Case You Missed It“.  And in case you missed a couple of things I found interesting I thought I’d throw them up here.

For instance:

According to the White House, 79% of those enrolled in Obamacare need subsidies because they cannot otherwise afford the premiums that have, in some cases, nearly doubled. Only 21% did not need subsidies.
As Businessweek noted, people “earning up to four times the poverty rate—as much as $96,000 a year for a family of four”—can get Obamacare subsidies from the federal government.

79%.  That’s right, 79%.  And why do they need subsidies?  Because they can’t afford their insurance premiums anymore.  And why can’t they afford their insurance premiums anymore?

ObamaCare.

Catch 22.

Oh, and here’s a great chart on something else you might have missed:

Yes, that’s right … when all is said, done and figured, the real unemployment rate is around 11%, not 6.7%.  No wonder those 79% need subsidies.

I threw that in because this is the state of the job market and that has an effect on who is going to enroll in this boondoggle of a government program.  But right now, it appears young people –  you know, the one’s Obama et al are counting on paying for this – aren’t enrolling.

But hey, is the White House worried?  Nah, they – as usual – have it all figured out:

About 30 percent of new enrollees are under 35. White House officials say that’s an acceptable mix, and they expect more young people to come on board closer to the March 31 deadline. “We think that more and more young people are going to sign up as time goes by, based on the experience in Massachusetts,” Gary Cohen, deputy administrator at the Centers for Medicare and Medicaid, said on a conference call with reporters. “We’re actually very pleased with the percentage that we have right now, and we expect that percentage to increase.”

This is the usual whistling past the graveyard this administration is so prone too.  They have no idea what will happen.  They “think” more will sign up.

Uh huh …

ObamaCare says it needs an enrollment of 38% of youth to pay for this monstrosity.  24% are enrolled.  And, apparently knowing youth better than I do (“Insurance?  I”m not sick.  Beside, I want that new 60″ TV.”) they’re sure they’ll make the time and effort to enroll and throw their money into the pit before March.

Not going to happen.  I’d suggest those who are going to enroll have, for the most part, enrolled.

Of course that doesn’t mean the administration won’t claim to have 38%.   But I’ll remind you they also claim unemployment is at 6.7%

~McQ


Observations: The QandO Podcast for 07 Oct 12

This week, Bruce, Michael, and Dale talk about the election.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


8.3% (updated)

Interesting, isn’t it?  I really don’t have to put anything else up there to explain that number.  Everyone in their brother will look at it and understand that the unemployment rate just rose from 8.2% to 8.3%.  Its sort of like celebrities who are identifiable by only their first name.  However, Obama and the Democrats certainly don’t want to grant that number that sort of status.

The U.S. economy closed out an otherwise weak second quarter by creating more jobs than expected, with 163,000 new positions added, but the unemployment rate rose to 8.3 percent.

Of course the job creation rate isn’t even at the break even point, even if up slightly.

But that doesn’t mean there aren’t those out there spinning the results:

"While the monthly gain is still relatively small by historical standards, it might help spark somewhat higher consumer optimism and spending," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in response to the report.

Yeah, “spark.”  Like all the other “sparks” we’ve been told about.  Like the 3 “recovery summers” we’ve been promised.  Like the job saves/creation the stimulus was going to provide (Remember we’re supposed to be at around 5% unemployment right now.  That’s what Obama promised if we gave him a trillion dollars to throw down the sewer.  He claimed that without it unemployment would rise to … oh, wait, over 8%).  And this month we’ve seen the official unemployment rate go a tenth higher.

As for the spin, let’s get real instead:

Despite the seemingly good news, the report’s household showed that the actual amount of Americans working dropped by 195,000, with the net job gain resulting primarily from seasonal adjustments in the establishment survey. The birth-death model, which approximates net job growth from newly added or closed businesses, added 52,000 to the total.

The household survey also showed 150,000 fewer Americans in the workforce.

Perking right along, aren’t we?  Oh, and by the way:

June’s anemic 80,000 gain was revised down to just 64,000.

And does the 8.3% number really reflect the problem?  Well, we’ve said for years that it understates it. And it does:

While the figures themselves have been gloomy enough, there is considerable debate over whether the Labor Department’s headline numbers present the true picture.

A measure that takes into account those who have stopped looking for jobs as well as those working part-time for economic reasons has hovered near 15 percent. The so-called "real" unemployment rate, or U-6 measure, is above 20 percent in Nevada and California.

On a national level, that more encompassing rate edged higher to 15.0 percent.

But if you listen to Obama he’ll tell you that what he’s done “worked”.  Then he’ll try to convince you it would be much worse if it hadn’t “worked”.  Really?

If you honestly believe that, then you have a convenient memory that has obviously forgotten all the promises made about the stimulus spending.

None of what he and his administration has done has worked, we’re in horrible economic shape, he’s had 3 plus years to do something that would help the situation (just one example is the oil and gas industry where approving Keystone and opening federal lands and the offshore to exploration would have crated thousands of jobs), and he’s failed.

Time to give someone else a shot.

And yes, it’s that simple.

UPDATE: Zero Hedge chimes in – basically the numbers aren’t as good as they’re being spun:

We got the pre-spun job quantity data already, where we learned that nearly 3 times the headline print was due to seasonal and B/D adjustments and is thus nothing but noise. Now we get the quality. As can be seen below, courtesy of Table A9 from the Household Survey, in July the number of part-time jobs added was 31K, bringing the total to 27,925, just shy of the all time record of 28,038. Full time jobs? Down 228,000 to 114,345, lower than the February full-time jobs print of 114,408. Once again, more and more Americans are relinquishing any and all benefits associated with Full Time Jobs benefits, and instead are agreeing on a job. Any job. Even if it means working just 1 hour a week. For the BLS it doesn’t matter – 1 hour of work a week still qualifies you as a Part-Time worker.

UPDATE II: Meanwhile at the White House, unicorns and moon ponies continue to prance.  Alan Kreuger:

While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.

UPDATE III: In case you need a reminder of “The Promise and The Reality”:

080312jobschart1-600x306

 

Forward!

~McQ

Twitter: @McQandO


Unemployment rate rises to 8.2%

As a follow up to the post below, another indication of how anemic our recovery is can be found in the “official” unemployment numbers.  This week it rose .1% to 8.2%.  I don’t have to belabor the fact that the number is a real lowball of the true unemployment rate.  Suffice it to say, regardless of the number, the trend this month has been to the negative:

The American jobs engine hit stall speed in May, with the economy adding just 69,000 new jobs while the unemployment rate climbed to 8.2 percent.

As another summertime swoon looms, the Bureau of Labor Statistics reported that job creation missed economist estimates for 158,000 new positions and the jobless rate rose for the first time in nearly a year.

Labor force participation remains near 30-year lows though incrementally better than last month, rising to 63.8 percent.

The unemployment rate that counts discouraged workers rose as well, swelling to 14.8 percent form 14.5 percent in April.

To put it succinctly, the employment picture sucks and doesn’t at all appear to be getting better.  Last months 115,000 new jobs has been revised down to 77,000 .  Couple all of that with what we see happening in the rest of the world and it paints a pretty bleak economic picture for at least the near future.

James Pethokoukis lays out some of that picture for you:

– 1Q GDP was revised down to 1.9% from 2.2%. The previous four GDP quarters of Obama recovery: 0.4%, 1.3%, 1.8%, 3.0%. Keep in mind that research from the Federal Reserve finds that that since 1947, when two-quarter annualized real GDP growth falls below 2 percent, recession follows within a year 48 percent of the time. (And when year-over-year real GDP growth falls below 2 percent, recession follows within a year 70 percent of the time.)

– Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 383,000. Claims have now risen in seven of the past eight weeks. The four-week moving average for new claims increased 3,750 to 374,500.

[…]

– Job cuts jumped by 53%  in May from April in the United States, according to a report by consultancy firm Challenger, Gray & Christmas. CNBC also notes that “employers announced plans to cut 61,887 staff from their payrolls in May, 67 percent more than in the same month of last year. The figure represents the most job cuts since last September.”

– The  Rasmussen Consumer Index find that 59% think the U.S. is currently in a recession.

Politically, this isn’t at all good news for an incumbent President seeking another term.  With 14.8 percent of the workforce out of work or “discouraged”, the conventional wisdom says they’re unlikely to think signing on for another 4 years of this is worth it.  And the economy, at this moment, and under his leadership, is showing no indication the next 4 years will be any different than these past 4 years.

That’s just ground truth for all the wishful thinkers out there on the left.

~McQ

Twitter: @McQandO


Observations: The QandO Podcast for 06 May 12

This week, Bruce and Dale talk about what the Trayvon martin case says about the media.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.


Unemployment–behind the official numbers (the myth of the retiring baby boomers)

The eight hundred pound gorilla in the room when one discusses the unemployment rate is its accuracy. 

8.1% of what?  Apparently, it is 8.1% as measured by those still receiving unemployment benefits, i.e. “actively” seeking work (a requirement to continue to receive the benefits).  Here’s the reality:

In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.

So, that means people have dropped out of the labor market and some have quit looking for work?

Yes.  All one has to do is look at this chart and understand that a huge piece of the labor market has simply vanished from the statistics used to compute the official unemployment rate.

 

1336146213_LFPRApr2012

 

The current labor participation rate is equal to that of January 1982.  From a high of 67.3% in January 2000, it has dropped 3% since.  That is huge.

Yet, we’re only at 8.1%?   Not bloody likely.  Not if history is any gauge.

 

WEBa1jobs0113_345.gif

 

So who are the missing workers?

The conventional wisdom out there likes to explain that huge drop away by claiming that the baby boomers are most likely choosing to retire rather than seek work.  They further claim there’s no reason to panic, it’s the old folks dropping out and they have their retirement to fall back on.

Really?

 

WEBage0504.gif

 

In fact, the older demographic has remained steady and, in fact, even seen job percentage increases among those thought to be retiring.

Job holders 55 and up have risen by 3.9 million — and fallen by 8.1 million among those under 55, Labor Department data show. It’s been 50 months and counting since payrolls peaked, a post-war record. Labor releases the April jobs report on Friday morning.

[…]

For the 65-69 and 70-74 groups, the employed shares are up 1.1 percentage points and 1.6 percentage points, respectively, over the past four years.

So much for that myth.  In fact the early retiree level (i.e. those who claim Social Security at the lowest possible age – 62) dropped to 26.9% last year, the lowest since 1976.

As that final chart points out along with the accompanying stats, it isn’t the baby boomers who are causing the labor participation rate to drop.  It is workers in the two younger demographics who’ve stopped getting benefits and still don’t have work.

Political implications?  Well one can fudge the official numbers all one wishes, but unemployment is a personal thing.  Official numbers don’t mean squat to someone without a job and is unlikely to convince them that things are better than they were.

Whether or not the official number drops below 8% before the election, the reality of unemployment to those 5 million without a job  and not carried in the official number remains.

~McQ

Twitter: @McQandO


Are the recent employment gains real?

Over the last several months, we’ve seen moderate gains in non-farm payroll jobs, with the rate of job creation running at about 200,000 jobs a month. That’s seems good, as does the continuing drop in initial claims for unemployment to around the 350,000 level weekly.

The thing is, how real is this job creation, in an environment where the past year showed a rate of GDP growth of 1.8%, and the most optimistic forecasts for this year indicate a 2.5% rate of GDP growth? Those rates of growth are significantly below the long-term trend rate of growth for the US economy, which is between 3% and 3,5% per year. How is employment increasing when GDP growth is so slow?

Well, the answer is, it may not be.  Take a look at the charts below, They are taken from the historical A tables of the Bureau of Labor Statistics’ (BLS) household survey. This is the survey where households provide employment data.

The first chart shows the number of people in the Household survey who’ve declared themselves to be employed since January of 2002.

AChart1

That does indeed indicate a moderate rate of employment growth since January of 2010. So far, so good.

The next chart, however, shows those who are employed as a percentage of the civilian, non-institutional, adult population.

AChart2

This provides a far more negative picture of employment. Essentially, the percentage of the population that is employed has crashed, and the percentage of employed was lower in 2011 than it was in 2010. As a percentage of the adult population, peak employment has declined every year since 2007.

Essentially, a additional 4% of the adult population is now jobless, compared to 2007, and that jobless percentage has been increasing, not decreasing, over the last two years, despite mild declines in the official unemployment rate.

~
Dale Franks
Google+ Profile
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The real unemployment rate

Ed Luce, writing in the Financial Times, discovers something our own Dale Franks has been saying for a couple of years.   The real unemployment rate is much higher than the published unemployment rate:

America is employing a decreasing proportion of its people. At the start of the recession, the employment-to-population rate was 62.7 per cent. The rate is now 58.5 per cent. Last month, unemployment fell from 9 per cent to 8.6 per cent. On the surface, this looked like a welcome leap in job creation. In reality, more than half of the fall was accounted for by a decrease in the numbers “actively seeking” work. The 315,000 who dropped out of the labour market far exceeded the 120,000 new jobs.

According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 per cent. Some have moved from claiming unemployment benefits to disability benefits, and have thus permanently dropped out of the labour force.

Etc.  The fact is the government undercounts the unemployed because it bases its count on those drawing unemployment benefits.  However once those benefits end, those who are still unemployed but no longer eligible for benefits become invisible.  They’re no longer included in the count.  Thus you’ll see reports where the number of jobs created is far below even that necessary to maintain the unemployment rate and yet the rate goes down.

We don’t count the unemployment rate accurately at all, and politicians, as you might imagine, are fine with that.

As for the jobs that have been created:

According to a study this year by Michael Spence, a Nobel Prize-winning economist from Stanford University, and Sandile Hlatshwayo, all net job creation since 1990 has been in the “non-tradable sector”. Between 1990 and 2008, the US added 27.3m jobs, of which almost every one was in services. Almost half were in healthcare or the public sector – both areas in which productivity growth is virtually zero. Conversely, manufacturing’s impressive productivity growth has tracked its shrinking headcount.

Its not clear how one can blame this on the “1%” or the “rich” instead of the evolution of our economic state in a myriad of different areas (and for just as many different reasons).  Apparently politicians have to have someone to blame when the public tries to stick them with the responsibility for the downturn, but this is something that has been developing for decades and has gotten a pretty firm final push from the recession.  And politically here’s the ground truth:

“The truth is that we don’t know how to fix the US labour market – we are in uncharted territory,” says Peter Orszag, Mr Obama’s former budget director, now a vice-chairman of Citi. “It would help to spend more on retraining and on infrastructure and to have a more rational immigration system. But these wouldn’t fundamentally transform the situation for the middle class … It is not yet clear what, if anything, could.”

Luce concentrates on fixing the education system which he calls “mediocre”.  And of course, it is a system that while widely panned, demands more and more investment for less and less return.  Naturally, in 1979 we were sold a bill of goods by our politicians that said government had to get much more deeply involved in education in order to save it from the mediocrity from which it obviously continues to suffer.  Thus the Department of Education was born.  The results have been very expensive and less than sterling.

Others will try to blame this all on globalization and the “outsourcing” of America’s manufacturing jobs.  But what they always fail to mention is America had priced itself out of the manufacturing business quite some time ago.  The fact that the jobs went elsewhere was a function of competition which has, in fact, benefited the American consumer.   You can’t have it both ways.  You can’t demand the lowest prices at Wal-Mart and then complain when a business does what it takes to meet that demand.

The bottom line here is we now face a new economic reality that says unless we make fundamental changes high chronic unemployment could become the norm.  Part of making those changes is to first recognize what shape we’re really in and why.  It isn’t because of the “rich” or the “1%”.  The problem is much broader and deeper than that.  Reporting incomplete statistics, such as the number used for unemployment, doesn’t help us understand or appreciate the shape we’re in or what we need to do to remedy that situation.  It simply continues to hide the reality of that situation in favor of making the number more palatable politically.

The number of unemployed is at 11% whether the politicians wish to admit it or not.  That’s a very high proportion of unemployed and as unemployment benefits continue to end for thousands of unemployed with meager job creation, it stands a chance of going higher.   That’s reality. That’s the number we should be dealing with.  Not this incomplete number that tells us a bad situation is better than it is.   That’s simply another means of self-delusion which has, unfortunately, become commonplace in the political world.  Harkening back to Peter Orszag’s words, just listen to the President’s new class warfare theme and you’ll understand that Orszag is exactly right. 

They haven’t a clue.

~McQ

Twitter: @McQandO


Economic Statistics for 2 Dec 11

Today’s economic statistical releases:

The big number today is the monthly employment situation. The BLS released the headline as "Unemployment rate falls to 8.6% in November; payroll employment rises by 120,000". The numbers behind the headline are less impressive. Actually, the headline isn’t all that impressive, considering that 120,000 new jobs is, at best, an anemic rate of job growth.  Also, it’s the time of year when a fair amount of hiring is seasonal, for temporary Christmas jobs, which can make the employment situation look better than it actually is, despite the seasonal adjustments to the data employed by BLS. Looking deeper, the labor force participation rate  continued to fall -0.2% to 64% as nearly half a million workers left the labor force.If the labor force participation rate was at the historical average of 66%, the unemployment rate would be 11.41%.  2.6 million persons were marginally attached to the labor force, about the same as last November.  The average workweek is unchanged at 34.3 hours, where it has been since September. Even worse, average earnings declined this month with the average hourly wage dropping 2 cents an hour to  $23.18. So, I think we can say that the drop in the unemployment rate is mainly due to people leaving the labor force, as the rate of job creation is weak.  Also, the lack of change in the workweek, and decline in wages implies that hiring pressure among firms is essentially non-existent as there has been no increase in the workweek for three months, and a glut of labor still exists as upward pressure on wages reversed this month. The only positive thing I can glean from this report comes from the household survey, where the number of respondents who are employed rose 278,000 to 140,580,000.

Monster.Com reports their employment index fell 4 points in November to 147 as online recruitment slowed.

~
Dale Franks
Google+ Profile
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Economic Statistics for 2 Sep 11

The Unemployment situation is the big report today, but it’s not the only one.

The Monster Employment Index rose slightly from 144 to 147 as the number of job want ads increased a bit.

Big deal. The headline number today is, of course, the Bureau of Labor Statistics’ report on the national employment situation, and it’s not good. The headline unemployment rate remains unchanged at 9.1%, and no net new payroll jobs were created last month. Last month’s increase in jobs was revised downward to 85,000.

To the extent there is any positive news to this report, it is in the underlying data. The labor force participation rate rose very slightly, from 63.9% to 64%. The U-4 unemployment rate (Total unemployed plus discouraged workers, as a percent of the civilian labor force) fell from 10% to 9.6%. The U-6 rate (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force) also fell from 16.3% to 16.1%. The number of employed persons also rose from 139,296,000 to 139,627,000.

The bad headline number, though, pushed the Dow down more than 200 points as of 6:40 this morning.

~
Dale Franks
Google+ Profile
Twitter Feed

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