I’m still technically on vacation and not following too much in the news, except for a couple of stories of continuing import. Obviously, I wrote a few days ago about Osama bin Laden’s rendezvous with Navy SEALs and justice, and the other is the economy. When I return from vacation on Monday, I’ll have more to say about the terrible Q1 GDP numbers, which the bin Laden mission mainly obscured, but the 1.8% annualized growth rate plays indirectly into today’s Bureau of Labor Statistics announcement that the unemployment rate in April rose to 9.0%, going up from 8.8% in March. At the same time, however, we added more jobs in a month than we had since massive hiring for the Census last year:
Nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several service-providing industries, manufacturing, and mining.
That didn’t actually make much of a dent in the unemployment figures, though:
The number of unemployed persons, at 13.7 million, changed little in April. The unemployment rate edged up from 8.8 to 9.0 percent over the
month but was 0.8 percentage point lower than in November. The labor force also was little changed in April. (See table A-1.)
Among the major worker groups, the unemployment rates for adult men (8.8 percent), adult women (7.9 percent), teenagers (24.9 percent),
whites (8.0 percent), blacks (16.1 percent), and Hispanics (11.8 percent) showed little change in April. The jobless rate for Asians was 6.4 percent,
not seasonally adjusted.
Even more interesting, short-term unemployment spiked upward:
The number of persons unemployed for less than 5 weeks increased by 242,000 in April. The number of long-term unemployed (those jobless for27 weeks and over) declined by 283,000 to 5.8 million; their share of unemployment declined to 43.4 percent.
That makes sense, considering yesterday’s announcement that weekly initial jobless claims have surged now for at least four weeks in a row, spiking upward 43,000 in a single week to reach the same level we saw for most of 2010:
In the week ending April 30, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 43,000 from the previous week’s revised figure of 431,000. The 4-week moving average was 431,250, an increase of 22,250 from the previous week’s revised average of 409,000.
The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending April 23, an increase of 0.1 percentage point from the prior week’s unrevised rate of 2.9 percent.
The advance number for seasonally adjusted insured unemployment during the week ending April 23 was 3,733,000, an increase of 74,000 from the preceding week’s revised level of 3,659,000. The 4-week moving average was 3,700,750, a decrease of 1,250 from the preceding week’s revised average of 3,702,000.
The rise in unemployment and in job creation could be good news, in that previously discouraged workers might be coming back to the work force. However, that doesn’t appear to be the case. The percentage of re-entrants among the unemployed actually held steady in for the past six months at 2.2%, and is actually lower than last April’s 2.4%. New entrants among the unemployed have held steady at 0.9%. The only real improvement in the profile has come from job losers and those completing temporary jobs, now 5.3% from last April’s 6.0% and January’s 5.6%. The number of people marginally attached to the workforce slightly rose from last year’s April figure by 34,000.
What does this mean? Well, adding 244K jobs is always good news, although it’s going to take years to make up the job losses at this rate as the National Journal notes; it will take 2.5 years to make up the raw numbers, and several years beyond that to make up the difference in population growth. Furthermore, with growth settling down to 1.8%, it’s unlikely that the American economy will even keep its current pace of job creation. A growth rate of 1.8% will lose jobs rather than create them, and we’re more likely to see the unemployment rate go up again.
Reuters reports it as unalloyed good news:
U.S. private employers shrugged off high energy prices to add jobs at the fastest pace in five years in April, pointing to underlying strength in the economy, even as the jobless rate rose to 9.0 percent.
Private sector hiring, including a big jump in the retail sector, boosted overall nonfarm payrolls by 244,000, the largest increase in 11 months, the Labor Department said on Friday. Economists had expected a gain of only 186,000.
The White House came close to declaring “mission accomplished”:
The unemployment rate in April backed away from a two-year low of 8.8 percent. It is derived from a separate survey of households, which showed a sharp decline in employment and a modest rise in the size of the labor force.
Economists, however, place more weight on the larger, less-volatile survey of employers.
The White House welcomed the report, which it said was a sign the jobless rate would soon recede.
“If you’re putting up jobs numbers like the ones we have been putting up in the last three months — quarter million a month — steadily that’s going to bring the unemployment rate down,” White House economic adviser Austan Goolsbee told CNBC.
That would be true if we could break into real GDP growth on a consistent basis. So far, though, we have spent more time in the 1s and 2s than even in the 3s — and that only for one quarter before sinking to last quarter’s 1.8%. It’s better news than losing jobs or failing to keep pace with population growth, as we did for almost the entire past three years, but the rapid increase in weekly claims and the drop in GDP growth are both danger signals that we haven’t yet come close to turning the corner.
Update: Jen Rubin talks to an economist who explains that the numbers are actually worse than people think:
The economy added 244,000 jobs but the unemployment rate went up to 9 percent. Is this a political problem for President Obama — as the economy improves, more enter the workforce and the unemployment rate looks horrible?
It’s actually even worse than it looks. The unemployment rate went up because of a divergence of the surveys, not an increase in the number of people looking for jobs. In the household survey, which determines the unemployment rate, we lost 190,000 jobs in April, and only 15,000 new people entered the workforce. Hopefully, the two?????? surveys will both indicate robust job growth soon, but not this month.
There is certainly danger for the president in the number of discouraged workers who are not in the labor market. As they reenter, a rising unemployment rate will be a headline risk for the White House. But we have to start creating jobs on a robust consistent basis before that happens, and despite a good headline number today, we are still looking at a very mixed job market.
What was the highest unemployment rate, post-Great Depression, for which an incumbent President won re-election? 7.2% in 1984.