July jobs report: 162k jobs added, unemployment rate “drops” to 7.4 percent

posted at 9:11 am on August 2, 2013 by Erika Johnsen

For July, some of the top-line employment numbers actually look pretty good — and when I say “good,” I do mean that in the most relative sense of the word, because nothing going on here would ever be classified as anything more than piddling near-stagnation in a time of actual substantive economic growth — but let’s not be too hasty. Via Bloomberg:

Employers added fewer workers than anticipated in July even as the U.S. jobless rate dropped to 7.4 percent, indicating uneven progress in the labor market.

The 162,000 increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain. Workers spent fewer hours on the job and hourly earnings fell for the first time since October. …

The unemployment rate was forecast to drop to 7.5 percent from 7.6 percent, according to the Bloomberg survey median.

The unemployment rate actually dropped to 7.4 percent? Huzzah! …Wait, hold on a second. Let’s check in with what happened to the labor force participation rate, shall we?

The labor participation rate dropped to 63.4 percent from 63.5 percent.

Uh oh.

 photo Screenshot2013-08-02at90104AM_zps69b400ba.png

That’s right — the unemployment rate actually dropped while number of people participating in the workforce also dropped. I can hardly wait for the White House to spin this as “encouraging news” and signs of the economy’s progress, even though the economy only grew by a truly pathetic 1.7 percent in the second quarter of the year:

But the bad news is this: The better-than-expected second-quarter number came at the expense of a downward revision to estimates to the first part of the year, from 1.8 percent to 1.1 percent. Add in anemic growth (at only an 0.1 percent pace) in the fourth quarter of 2012, and we’ve now faced nine months of an expansion at a bit less than a 1 percent annual rate. Every two steps forward for growth seems to be accompanied by a step and a half back.

It would be one thing if that kind of slow growth was happening in a time of full employment, when the economy was basically sound. But with 7.6 percent unemployment, the nation could really use a few quarters in a row of 4, 5 or 6 percent growth to get us back to where people can really be pleased with the economy. It’s not an outlandish view; that’s exactly what happened in the early 1980s, in the aftermath of the last very deep recession.

What’s to celebrate, really? The fact that we’re not in a technical recession? That’s something, I suppose, if you’ve resolved yourself to this era of virtual stagnation — but even that might only be a matter of time, ugh.

 


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Over

Bmore on August 3, 2013 at 10:34 AM

Ms. Johnson, I smell glee over your commentary of the state of the US economy.

ask yourself, are you a patriot or a partisan?

nonpartisan on August 3, 2013 at 6:43 PM

Ms. Johnson, I smell glee over your commentary of the state of the US economy.
ask yourself, are you a patriot or a partisan?
nonpartisan on August 3, 2013 at 6:43 PM

Just so you know, the two are not mutually exclusive, in much the same way you can be a Socialist traitor and a partisan.

And contrary to your assertion, a post that practically screams “I told you so!” does not necessarily mean that one is gleeful.

Maddie on August 3, 2013 at 10:20 PM

Conditions after WWII were far different, it was literally a different world.

It’s possible for the US economy to grow significantly over the next decade without any increase in the size of the workforce due to the rising impact of internet automation, advances in robotics, and new software system. As a famous VC has said, software is eating the world. You can automate warehouse and manufacturing operations to reduce costs and better compete with Asia, and back-office corporate America will continue to operate more efficiently as globalization and more advanced software reduce the need for head count.

bayam on August 2, 2013 at 3:19 PM

I appreciate the answer and my apologies for being slow to get back to you. I’ve been busy with family in town.

Anyway, this is basically an argument that because the private sector is constantly becoming more efficient, the government should continue to be inefficient. After all, you’re not arguing that the sequester is impacting the government’s ability to carry out its basic functions. Your only argument is that it will put people out of work and the private sector won’t suck them up. Maybe it won’t, and there can be a number of reasons for that, but blaming it on ever increasing productivity gains is unconvincing because that’s nothing new. The same argument could have been made in 1945. “It’s no longer the 1870s. It’s a totally different world now. We have electricity and machines that can do the work of 10 men.” Somehow, the private sector has always managed to figure out a place for human beings to fit in despite the constant change.

Besides that, there really is no slack to pick up. The cut was to baseline budgeting, meaning the government as a whole will still spend more this year than last, just not as much more as originally planned.

NukeRidingCowboy on August 4, 2013 at 10:53 AM

And what exactly are the jobs being created. Just this week I read a statistic that out of the 900K new jobs, 730K were part time??? Is that a recovery?

LadyGator88 on August 4, 2013 at 11:06 AM

There’s no progress, by design. Most of the non-drooling media, admittedly a minority, realize this. But the march of deliberate destruction must be carried on. Obama’s loving it.

arand on August 4, 2013 at 11:22 AM

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