Saturday, October 6, 2012

As If By Magic

February 2009, there were 141.748 million Americans employed in the United States and the labor force participation rate was 65.6%.  In September 2012, 140.025 million Americans were employed and the labour force participation rate had fallen to 63.6%.  Between February 2009 and September 2012, the civilian non-institutional population grew by 8.859 million adults; yet, 1.723 million fewer Americans were working.  In the last year alone, 1.1 million Americans left the work force.
Given the massacre in Denver and next month's election -- "unexpected" drop in the unemployment rate requires a willing suspension of disbelief.  The "spontaneous uprising" in hiring of a whole 114,000 jobs allegedly caused a drop in the U-3 rate of 0.3%.  In August, the US economy added 96,000 and the unemployment rate went from 8.3% to 8.1%.  In July, the US economy added 163,000 jobs and the unemployment rate went up to 8.3% from 8.2% in June when only 80,000 jobs were created.  Go figure. a economy growing at a miserly 1.2%...873,000 people managed to find jobs.  Of course, 582,000 jobs were part-time jobs, which the Left used to say weren't "real jobs."  The addition of 873,000 jobs, which, according to CNBC, is “the highest one-month jump in 29 years.”  That would have been in November, 1983...when the GDP was 8.5%.  Once again, the annualised GDP rate for Q2 in 2012 was 1.2%. If the labour force participation rate was constant, the U-3 rate would be 10.7%.  
By the way, at a rate of adding 114,000 jobs per month, we wouldn't return to full employment until 2025.   114,000 jobs per month would be great...if we were living in the late 1950s.  We need twice that many just to maintain current employment.  A robustly growing economy requires job creation in the range of 300,000+.  Take a look at the number of jobs that were being created during the Reagan Recovery when GDP was 7-8%. 

Based upon its most recent Household Survey, the Bureau of Labor Statistics has reported that the unemployment rate in the United States decreased from 8.1% to 7.8% in September.  This apparent improvement in our labor markets is deceptive for the following reasons:
1.  Two-thirds of the new jobs claimed by the Report (582,000 jobs) are part time jobs.
2.  Of the claimed 582,000 new part time jobs, only 268,000 are real.  The remaining 314,000 part time jobs are the result of a "seasonal adjustment" by the BLS.
More jobless people
3.  The BLS reported dramatic increases in seasonally adjusted part time employment in September of 2011 (483,000 jobs) and September of 2010 (579,000 jobs) only to report significant decreases in such jobs in each of the following Octobers (419,000 jobs in 2010 and 480,000 jobs in 2011) with continuing decreases in November and December.  It is therefore reasonable to expect that the increase in part time jobs this year and the resulting improvement in the unemployment rate is also temporary.
4.  The U-6 unemployment rate, which is the broadest measure of unemployment, in that it includes among the unemployed those persons who are working part time but would rather be working full time, was unchanged in September at 14.7%.

In conclusion, in the third year of an alleged recovery, the unemployment problem in the United States did not really change in September. This is not good news for the United States or the continued employment prospects of President Obama.


  1. That news dude is very excitable!

  2. These numbers are all wrong. The Feb. 2009 have all undergone revisions to the current population survey so the monthly BLS reports where they came from are no longer valid. Feb. 2009 Employed Persons count was 141,660,000. The count in Sept. 2012 was 142,974,000, not 140,025,000. No one can find where that number comes from. So that produces a GAIN of 1,314,000 since Feb. 2009, not a decline of 1,723,000.

    The LFPR in Feb. 2009 was actually 65.8 based upon revisions to CPS. Still, the larger point about the unbelievability of the September BLS report is correct. In fact, during the prior 6 months, the Household Survey had shown an average employment gain of only 6,000 per month and 4 of those 6 reports showed negative numbers. Then magically, employment leaps by 873,000 in September. That comes amid no substantial declines in weekly unemployment claims and decelerating real GDP growth. Q4 2011 printed real annualized GDP at 4.09%, Q1 2012 dropped to 1.96% and Q2 2012 got revised down to 1.25%. This is not a picture that supports a monthly gain of nearly a million workers.