He did it. As promised, Obama is pulling us back from the brink. His policies are finally taking hold.
Well, as usual, nothing is as it seems.
The Labor Department says that employers added about 120,000 jobs this past month compared to the 80,000 added the previous month when we saw only a 0.1% drop in the unemployment rate. So an additional 40k equals 0.3%? I’m no mathematician, but…
I’m confused. In June of this year (a mere 5 months ago) the New York Times reported it would take 150,000 jobs added per month just to keep up with population growth & to keep the unemployment number from rising. Yet it went down. Huh?
There must be a reasonable explanation. I don’t know about reasonable, but here it is.
What was underreported was the number of people who have quit looking for work in the last month. It is 315,000, dwarfing the amount of hires.
So, just like magic, they’re no longer counted. Therefore, the universe of jobs available in the country is down by 315,000. That is the labor force participation rate. The labor force (workforce) participation rate is a meager 64%. It fell to 64% from 64.2%. So the 0.2% drop equals 315,000 people leaving the workforce.
I’ve written of the Workforce Participation Rate. It’s a measure of the active portion of an economy’s labor force. The participation rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work are not included in the participation rate. In a poor economy, such as this, many people get discouraged and stop looking for employment and as a result, the participation rate decreases.
That alone tells us how small the labor force participation rate is.
It also tells us how small the universe of available jobs in the country is, when creating 120,000 can have that seemingly large effect, and we still had over 400,000 applications for unemployment compensation reported yesterday. So just 120,000 new jobs can lower the unemployment rate almost a half a point.
I’d bet, if one were to look at that 120k, they would find most of those jobs are seasonal hires. That means they won’t exist in January.
It will be interesting to see, after the Holidays, what kind of wacky accounting tricks the Administration uses to keep that already bogus number under 9%.
Maybe they can hope that many more people just give up?
That would work.
Attribution: Calculated Risk, Godfather Politics, Drudge