
unemployment (Photo credit: Sean MacEntee)
Much more! In fact, Mish’s analysis of that jobs report so far exceeded my own humble and inadequate attempt to do the same that it’s embarrassing. I’m glad he’s here to “bat cleanup.”
On the surface, this [report] is a solid showing, and 100% certain to boost the Obama campaign. I suggest these numbers will overshadow a horrendously weak performance by the president in the debate.
Yup. I agree. In fact some commentators have wondered about the timing, and the content, of the report. Some people continue to believe that the BLS – a government agency after all – is subject to political influence! That’s all I’m going to say about that.
Mish goes on:
That said, a closer look shows the entire drop in the unemployment rate can be attributed to a surprise rise of 582,000 in part-time workers. U-6 unemployment remained at 14.7%. (U-6 includes part-time workers who want a full-time job.)
Still, all things considered, this was the strongest report in four months.
Does it change my recession outlook?
No, it doesn’t. A one-month potential outlier based primarily on a rise in part-time employment, accompanied by other weak data does not change my perception.
After digging into the numbers, Mish notes:
Over the past several years people have dropped out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low. Some of this was due to major revisions last month on account of the 2010 census finally factored in. However, most of it is simply economic weakness…
Since the employment low in February 2010, nonfarm payrolls have expanded by about 4.7 million jobs. Of the 8.8 million jobs lost between January 2008 and February 2010, approximately 53% percent have been recovered (not accounting for normal demographics growth)…
In the last year, the civilian population rose by 3,701,000. Yet the labor force only rose by 1,059,000. Those not in the labor force rose by 2,643,000 to yet another record high 88,921,000.
In the last year, the civilian population rose by 3,701,000. Yet the labor force only rose by 1,059,000. Those not in the labor force rose by 2,643,000 to yet another record high 88,921,000.
That is an amazing “achievement” to say the least, and as noted above most of this is due to economic weakness not census changes.
Decline in Labor Force Factors:
- Discouraged workers stop looking for jobs
- People retire because they cannot find jobs
- People go back to school hoping it will improve their chances of getting a job
- People stay in school longer because they cannot find a job
Were it not for people dropping out of the labor force, the unemployment rate would be well over 10%. (My emphasis)
His conclusion:
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
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