I wanted to add a note of caution to John Steele Gordon’s post regarding today’s Bureau of Labor Statistics report on the unemployment rate.
It’s certainly true there’s good news in the report. But if you examine the internal data, there are also grounds for concern.
To be specific: the labor-force participation number fell to 63.7 percent, the lowest (seasonably-adjusted) figure since May 1983. If the economy were stronger, an increase of 250,000 jobs would actually move the unemployment rate up a bit, as people who had given up looking for work would once again start (meaning they would be counted as part of the labor force again). But what appears to have happened in January is the number of people being hired increased by less than a quarter-of-a-million while the number of people who dropped out of the labor force was around 1.2 million, a record figure. (For more, see here.)
Consider this: If the labor-force participation rate in January 2011 (64.2 percent) was the participation rate in January 2012 (63.7 percent), the unemployment rate would be 8.9 percent instead of 8.3 percent (see this piece by Matt McDonald for more). And if the same number of people were looking for work today as in 2007, unemployment would be right around 11 percent.
In addition, as Tyler Durden points out, in January, the number of part-time workers rose by nearly 700,000 (from 27,040,000 to 27,739,000) while the number of full-time jobs increased by only 80,000 (from 113,765 to 113,845).
These are not good signs. And when you combine this jobs report with the new CBO report (which predicts unemployment will reach 8.8 percent in the fall), the news that last year we experienced the worst sales year on record for housing, and the news that real GDP in 2011 increased only 1.7 percent (down from 3.0 percent in 2010), I’m not terribly encouraged.
Gaining jobs is better than losing jobs, but our economy remains in a very weak condition.
Don't panic, bibi will bring the global economy down before the election.
Peter, Obama only needs a soundbite, which he now has: Unemployment Down!!! My economic plan is taking hold!! n nYou cannot argue economic statistics. It glazes people over. The only effective attacks now adays are lack of credibility and questionnable motives. Think what successful litigators do: they destroy the character of the witness and the rest takes care of itself. Obama's character, credibility and motives are subject to great question, yet no one is making that simple and powerful case. Instead, you get caught up in arguments about the unemployment rate. A real loser of an argument.
One should never put too much faith in monthly figures. There are always anomalies which when applied to to short term can cause major distortions. n nAs I understand it, this month included a substantial adjustment that increased the population based upon the results of the 2000 census. Though there was some effort to adjust, it is probable that the decline was an statistical anomaly rather than an actual decline. n nBetter to use quarterly or annual data. Unfortunately, politically this is unavailable. n nAbe Irwin
According to Charles Krauthammer on Fox tonight, the decrease in the percentage participating resulted from a technical change in the census bureau's statistical practices that took place effective in January. So, the change in the participation rate is an artifact of a statistical change in the data collection process. The participation rate only fell in a meaningless technical sense. n nAnd while we are on issues that have been misreported–while the IRS cleared Gingrich of the tax issues, he was censored by the House for lying to the ethics committee, not for the tax issue per se. So Romney is not running misleading ads about Gingrich being censored for unethical behavior. Gingrich did unethically lie to a Congressional committee while he was Speaker of the House. The WSJ and others have criiticized Romney's ads on the basis of the IRS clearing Gingrich of the tax charges. But Romney's ads on this are not misleading or refuted by the IRS clearance on the tax issues–Gingrich was censored and disgraced for lying to the Ethics Committee. n