Jobs Report: More Addition Through Subtraction

Friday, December 7th, 2012 and is filed under Blog, Economy

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Here we go again.  This is getting old, but once again the top line number of the monthly unemployment report makes Obama look good, but a more trenchant look into the numbers reveals a permanently sick economy.

The headline number is that unemployment; namely, the ambiguous U-3 rate, dropped from 7.9% to 7.7%.  But once again, when you look into the Establishment Survey, you will find that the drop did not come as a result of strong job growth.  146,000 payroll jobs were created in November, still below the 170-180k needed just to keep up with population growth.  Moreover, the number of jobs created in September was revised down by 16,000 and in October – yes, the report that came out right before the election, the number was revised down by 33,000.

So why did the rate drop by .2%, according to the Household Survey?  You guessed it.  The labor force contracted by a commensurate .2%.

The labor force shrunk by 350,000, even as the working-age population grew by 191,000.  As such, the number of employed persons, at least according to the household survey, dropped by 122k.  Taken together with population growth, there are now 542,000 more people classified as “not in the labor force.”

If the labor force participation rate would be at pre-Obama levels, the unemployment rate would be up to 10.7%.  Hey, maybe we can discourage enough workers for the U-3 number to drop to per-recession levels!