Bureau of Labor Statistics
The Bureau of Labor Statistics (BLS) dropped a bomb this morning. Yesterday, there were some positive signals that job growth was increasing compared to recent months. The ADP estimate for August came in at 201,000, which was much higher than the 140,000 estimate.
But the official job report for August was nowhere near expectations. According to the BLS, the economy created 96,000 jobs in August with estimates for June and July being revised downward:
U.S. employers added 96,000 jobs last month, a weak figure that could slow any momentum President Barack Obama hoped to gain from his speech to the Democratic National Convention.
The unemployment rate fell to 8.1 percent from 8.3 percent in July, but only because more people gave up looking for work. The government only counts people as unemployed if they are actively searching.
The Labor Department also says 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the beginning of the year, below 2011’s average of 153,000.
That’s not good at all, folks. Remember that the economy needs to create 150,000 jobs each month just to keep up with population growth. So while the spin will be that this is positive, but the economy is still experiencing essentially a net-zero job growth and more people are giving up hope of finding work. Futhermore, James Pethokoukis notes that “[i]f labor force rate had just stayed same as last month, [the]unemployment rate would be 8.4%.”
Before Democrats, the Obama Administration, liberals, and progressives start crowing about the updated unemployment figures—which the Bureau of Labor Statistics say is now down to 8.6%—there’s something you should know about the why it is down—and it’s not pretty.
The BLS divides up the unemployment numbers into six figures, U-1 through U-6. U-3 is the “official” number, the one that’s always toted on the primetime news channels. U-6, however, is the real unemployment figure, which counts marginally attached workers (those that have stopped looking for work for the time being) and underemployed workers (those working part time but want full time work), among others. And the worst part is?
Even that is rosy compared to the “real truth.”
The truth comes in near the middle of the Bureau’s press release:
In November, the number of job losers and persons who completed temporary jobs declined by 432,000 to 7.6 million. The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.7 million and accounted for 43.0 percent of the unemployed. (See tables A-11 and A-12.)
The civilian labor force participation rate declined by 0.2 percentage point to 64.0 percent. The employment-population ratio, at 58.5 percent, changed little.(See table A-1.)
Today, we learned that the economy had added 431,000 jobs in May but that most of them were temporary Census positions:
Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month since the recession, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the Census, and private-sector job growth was weak.
The unemployment rate fell to 9.7 percent nationwide, from 9.9 percent in April, the department said.
The figures for May represented the fifth consecutive month that payrolls have risen, but fell below analysts’ expectations that 540,000 jobs would be added to the economy.
The shortfall was immediately reflected in futures trading in the Wall Street stock indexes, with the Dow Jones industrial average expected to open almost 2 percent lower.
Altogether, 411,000 of the jobs added were for Census workers whose positions will disappear after the summer.
The net gain in government jobs was 390,000, while the private sector added only 41,000.
In other words, 95% of the jobs created in may were government jobs that will no longer exist as of mid-July. But for that census hiring, the unemployment rate would not have gone down at all and we would have had an anemic jobs report.
This is six months after we were told that the worst is behind us.
President Obama, however, thinks this report was good news:
President Barack Obama said on Friday the gain of 431,000 jobs in May is a sign the U.S. economy is getting stronger, although there will still be ups and downs going forward.
Yesterday, the Bureau of Labor Statistics released jobs number from the month of April, which found that the economy created 165,000 jobs — slightly more than the 150,000 jobs the economy needs to produce to keep up with population growth.
Employment rose by 165,000 jobs in April, according to the monthly economic report released Friday by the U.S. Bureau of Labor Statistics. And unemployment dropped slightly from 7.6 to 7.5 percent—a minimal change, but one marking a steady, .4 percent drop since January. It’s the lowest unemployment rate in four years.
Employment increases were seen in professional and business services, food services and drinking places, retail trade and health care, according to the report.
The Labor Department also announced revised and more positive figures for February and March: Employment for February was revised from 268,000 to 332,000 jobs gained and for March from 88,000 to 138,000 jobs gained.
There’s definitely some good news there after years of lagging economic growth. But there are still some concerns about another economic slowdown. But it should be noted that the U-6 unemployment rate, which many call the true measure of the jobs picture, inched up to 13.9% from 13.8%. Reuters noted that the “details of the report remained consistent with a slowdown in economic activity.”
Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.
I almost feel sorry for the Obama administration’s spin doctors. Every month, they probably wait for the unemployment numbers from the Bureau of Labor Statistics with the same level of excitement that people on death row wait for their execution date.
This has been going on for a while, and today’s new data provide another good example.
As the chart below indicates, the White House promised that the unemployment rate today would be almost 5 percent if we enacted the so-called stimulus back in 2009. Instead, the new numbers show that the jobless rate is 7.9 percent, almost 3.0 percentage points higher.
I enjoy using this chart to indict Obamanomics, in part because it’s a two-fer. I get to criticize the administration’s economic record, and I simultaneously get to take a jab at Keynesian spending schemes.
What’s not to love?
That being said, I don’t think the above chart is completely persuasive. The White House argues, with some justification, that these data simply show that they underestimated the initial severity of the recession. There’s some truth to that, and I’ll be the first to admit that it wouldn’t be fair to blame Obama for a bleak trendline that existed when he took office (but I will blame him for continuing George W. Bush’s policies of excessive spending and costly intervention).
That’s why I think the data from the Minneapolis Federal Reserve are more damning. They show all the recessions and recoveries in the post-World War II era, which presumably provides a more neutral benchmark with which to judge the Obama record.
On Friday, the Bureau of Labor Statistics released the jobs report from September, showing 114,000 jobs created and the unemployment rate dropping to 7.8% (U-3 rate) — the first time it’s been under 8% since January 2009. The U-6, what many call the true measure of unemployment, is still stuck at 14.7%.
Via James Pethokoukis, here is an updated look at unemployment where the White House said it would be compared to today’s reality:
On its face, the report is very good news for President Barack Obama, who has been dogged by weak jobs numbers during this so-called “economic recovery.” However, the details of the September jobs report habe a lot Republicans questioning how the unemployment rate could fall when only 114,000 jobs were created — which is still below the number needed to keep up with population growth.
Despite the conspiracy theories about the BLS cooking the books, the Wall Street Journal explains why the unemployment rate dropped:
It’s that time of the month again. Everyone closely following the presidential election is closely looking at the Bureau of Labor Statistics’ monthly jobs report. According to the BLS, the economy added a net of 163,000 jobs in July, but the unemployment ticked up to 8.3%.
The good news for President Barack Obama is that the report beat the 100,000 consensus estimate from observers. The +163,000 does, though just barely, surpass the number of +125,000 to +150,000 needed just to keep up with population growth. The bad news is that some 150,000 workers left the labor force last month, the U-6 employment increased to 15%, and the numbers for June were revised downward, from +80,000 to +64,000. Also, the number of unemployed increased by 45,000 in July.
Basically, the hard number of jobs created last month is good for Obama. But the fact that unemployment is still over 8% for the 42nd straight month is a point that is going to be hammered home by Mitt Romney and Republicans.
James Pethokoukis, an economist at the American Enterprise Institute, notes that unemployment would 11% if the labor force participation were at the same size as when Obama took office. He also points out that “[i]If labor force participation rate hadn’t declined since just last month, unemployment rate would have risen to 8.4% [in July].”
There are three more jobs reports to go between now and the election in November. Things have to get better than this if Obama hopes to be re-elected.
Image courtesy of the American Enterprise Institute
It has been difficult for the Obama Administration to spin Friday’s jobs report. Analysts were predicting that they economy would create up to 100,000, but the numbers reported by the Bureau of Labor Statistics showed that only 80,000 jobs were created in June; far below the 120,000 to 150,000 needed each month just to keep up with population growth.
Even though the report was a less than encouraging sign that the economy is recovering, leave it to Rep. Debbie Wasserman Schultz to try to put a happy face on such pathetic numbers:
Remember that time when President Barack Obama said the “private-sector is doing fine”? Apparently, the private-sector hasn’t received that memo. According to new numbers from the Bureau of Labor Statistics, employers posted the fewest number of job openings in five months:
The Labor Department said Tuesday that job openings fell to a seasonally adjusted 3.4 million in April, down from 3.7 million in March. The March figure was the highest in nearly four years.
The decline could mean employers are growing more cautious about adding workers in the face of financial turmoil in Europe and slower growth in the United States. Job openings can take one to three months to fill.
There were 12.5 million unemployed people in April. That means there was an average of 3.7 people competing for each open job. In a healthy job market, the ratio is usually around 2 to 1.
Openings have risen by almost a third since the recession ended in June 2009. But they are still below pre-recession levels of about 5 million per month.
April’s decline in openings has coincided with a sharp slowdown in hiring. Employers added an average of only 73,000 jobs in April and May. That’s down from an average of 226,000 in the first three months of this year.
On Friday, the latest jobs numbers were rolled out from the Bureau of Labor Statistics. As you might have read, the economy created 120,000 jobs in March, well below consensus estimates; though the unemployment rate did fall to 8.2%.
But with the election on the way, we can expect a renewed debate on stimulus spending. And as James Pethokoukis notes, the unemployment rate is far above that the Obama Administration claimed it would be at this point with the 2009 stimulus bill:
Swing and a miss. A big miss. A really big miss. U.S. employers added just 120,000 jobs last month, the Labor Department said on Friday. That’s the smallest increase since October. Economists polled by Reuters had expected nonfarm employment to increase by 203,000. And as economist Robert Brusca points out, “The strong amazing run in household jobs came to a crashing halt as employment in that survey fell by 31,000 after rising by 42,000 last month and 847,000 the month before that.”