About That Jobs Report…
posted at 2:30 am on October 6, 2012 by Matt Vespa
So, we added 114,000 jobs and the unemployment rate dropped to 7.8% – which is the first time the rate has dipped below 8% during the Obama administration. Some in the media have claimed that this new development has “shattered” the Romney campaign’s main talking point, which is that the unemployment rate has remained above 8% for over forty consecutive months. Additionally, for twenty-six of the those months, it was above at 9%.
However, at the end of the day, it’s still how people feel about the economy and it’s nowhere near the levels of confidence the Obama camp would like us to believe. Ed Morrissey posted yesterday on the main page that something is fishy with the math and he wasn’t the only one.
Morrissey pointed out that CNBC called “the numbers ‘tame,’ but also note[d] the “contradictory” numbers.” Furthermore, he cited “Bloomberg’s Alex Kowalski [to offer] an explanation that covers most of the confusion.”
Job growth remained tame in September, with the economy creating just 114,000 net new positions though the unemployment rate fell to 7.8 percent.
The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number.
The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions.
But the government said the total number of jobs employed surged by 873,000, the highest one-month jump in 29 years. The total of unemployed people tumbled by 456,000.
Something’s odd with this report. Either the household survey (one of the two surveys the BLS uses to compile this report) is way off, or the BLS is underreporting job growth in the overall numbers.
The household survey showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual Census population adjustments. Some 582,000 Americans took part- time positions because of slack business conditions or those jobs were the only work they could find.
James Pethokoukis at the American Enterprise Institute also reiterated yesterday the same facts relating to the Bureau of Labor Statistics used with the “household survey.” Furthermore, he claimed that “take-home pay” is virtually flat when you factor in inflation. The U-6 curve – which indicates Americans in part-time jobs looking for full-time employment – has remained stagnate at 14.7%. Forward Obamabots! Forward!
the shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress? Here is RDQ Economics:
Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.
Additionally, the stimulus package’s predictions remain a sticky wicket for the administration since they calculated that unemployment would bet around 5.6% after spending close to a trillion dollars to ‘boost’ the economy. Do we have any nails left for the Neo-Keynesian coffin? Lastly, Pethokoukis states that we’re on track to create less jobs than last year at roughly 146,00 jobs per month compared to 153,000 in 2011.
This lackluster economic news is compounded with the abysmal news that our economy grew by only 1.7% this year.
We’re still not out of the woods. And to assume that just because we’ve allegedly dipped below 8% in the unemployment rate isn’t indicative of anything positive for the Obama campaign to use against Romney in the next debate. As it was demonstrated in 2010, ‘it could’ve been worse’ isn’t a campaign message that screams enthusiasm or drives your base to the polls.
Correction: Concerning this jobs report, I must admit that I made a mistake in a previous post with the numbers. I mistakenly put the estimate at 386,000, instead of 115,000, but some did say that the 386,000 new jobs added in a revision – as of March 2012 – was going to be indicative of a good September report. They thought wrong.