Hope in the jobs numbers

By Felix Salmon
November 4, 2011
employment report; you just can't see it by looking at the headline numbers.

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There’s some encouraging news buried in this month’s employment report; you just can’t see it by looking at the headline numbers. Black unemployment is plunging, down to 15.1% in October from 16.7% in August. The number of long-term unemployed fell by 366,000 to 5.9 million, which is a decline of 2.2 percentage points. The broad U-6 unemployment rate fell by 0.3 percentage points, to 16.2%. And note those upward revisions to previous months, too: August’s zero is now +104,000, September was revised up to +158,000, and the twelve-month average is +125,000. Not good enough, but pointing in the right direction.

No one’s opening any champagne this morning: the levels here are still atrocious. But at least there’s reason for hope that the economy is still above stall speed; I, for one, am much more sanguine about the prospects for a double-dip recession than I was a couple of months ago. If the jobs situation isn’t getting worse, that means America’s still growing, and that the recession’s still over. And it’s a lot easier to accelerate a recovery than it is to turn around a decline.

Easier — but not easy. Not when the central bank and the executive both look powerless. The base-case scenario is still that things are going to be very bad through 2012. And of course if Europe implodes, they’ll be worse. Still, the economy has managed to gain 342,000 jobs in the past three months. And that’s not nothing. Even if you adjust for population growth.

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Comments
3 comments so far

In fact, just about everything except the single headline “80,000″ fell into the “good but not great” (or maybe “okay but not good”, depending on your calibration) category; you don’t have to dig much. The other headline number — the drop in unemployment rate — came with a participation rate that was stable (“up” by much less than the margin of error), which hasn’t been the case for some previous moves. Europe is my biggest concern right now.

Posted by dWj | Report as abusive

342,000 jobs added in the last 3 months. 400,000 new first time unemployment claims each week for the last 3 months. Hmmm……342,000 vs. 4.8 million. And the unemployment rate goes DOWN!?! If you believe this, you’ve completely lost it. This administration will cook the numbers to say anything because they are only about one thing and that is getting re-elected and furthering their radical socialist agenda. America had better start getting up and smelling the coffee because time is running out.

Posted by BertC | Report as abusive

@BertC, the unemployment rate supposedly measures, “The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.” While the definition isn’t explicitly tied to unemployment benefits, there may nonetheless be a connection in that people whose benefits have expired gain nothing by declaring themselves to be formally unemployed. (And after 99 weeks of actively seeking employment, they might reasonably be discouraged.) When interpreting the unemployment rate, be careful to understand what it does and doesn’t measure.

“Hmmm……342,000 vs. 4.8 million.”
But this is apples and oranges. The 342,000 is a *net* addition of jobs. If 4.8 million jobs were destroyed, then 5.1 million jobs were created.

That isn’t enough to absorb the growth in the workforce, however. If we weren’t seeing so many “discouraged workers” as their 99 weeks of benefits expire, then the unemployment rate would be slowly rising.

Posted by TFF | Report as abusive
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