Fantastic news on jobs

By Felix Salmon
February 3, 2012
This is two fantastic jobs reports back-to-back, with the second even better than the first.

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What mean reversion? This is two fantastic jobs reports back-to-back, with the second even better than the first.

You thought the December jobs report was great? I certainly did — but it’s been revised, now, and it’s even better than was first reported. And the January report is positively glowing.

Unemployment was just 8.3% in January, marking three successive months where it fell by 0.2 percentage points. This time last year, there were 13.9 million unemployed; that figure has now dropped by 1.2 million people, or 8.3%. That’s really impressive for an economy which is hardly booming. And it’s a real decline, too: the employment-to-population ratio is just as high as it was a year ago, even as the total population has risen by 3.6 million people.


One glance at these charts is enough to show that there’s still a very long way to go. Unemployment is far above where it should be; payrolls need to stay strong for a long time to make up for all the jobs lost during the recession; much more of the population needs to be working; and, most importantly, we need to do something about the stubbornly large ranks of the long-term unemployed.

But none of these things can be addressed in a single month: creating jobs takes time. And what we’ve been seeing over the past couple of months is an economy moving smartly in exactly the right direction.

And lookie here! If you check out Table A-5, and look at the unemployment rate for male Gulf War-era II veterans (that is, veterans of the wars in Iraq and Afghanistan), you’ll see that it’s fallen from 15.5% to 7.7% in one year. If that’s not great news, I don’t know what is.

So while there’s a lot of work to be done, let’s allow ourselves a bit of celebration today. For all the problems in the world — and the US economy could still be derailed if something nasty happens in Europe — things are moving very much in the right direction for the time being. Long may it last.


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How much of this is from the B/D adjustment that was made for this report?

(Don’t get me wrong; it’s a positive outcome. But when I see something like that 15.5 to 7.7 drop, I worry about the validity of the model–especially with a steadily declining E/P Ratio.)

Posted by klhoughton | Report as abusive

“fantastic”? what is with this unfounded optimism? election season? What a joke.

Posted by Foppe | Report as abusive

Am I missing something? 1.2/13.9 = 8.63 percent

Posted by airmattj | Report as abusive

To echo Foppe’s point, Felix says – “And it’s a real decline, too: the employment-to-population ratio is just as high as it was a year ago, even as the total population has risen by 3.6 million people”

Per Table A-1 of the BLS report – the percent of the population that is employed is barely up from 1 year ago. It is up 0.1% if seasonally adjusted, 0.2% if not SA. That’s quite a contrast with the unemployment rate falling from 9.1% in Jan 2011 to 8.3% in Jan 2012, with the difference obviously being that a lower percent of the population is working or trying to work than a year ago. So no, most of the increase in the unemployment rate is not a “real” decline.

I agree with Foppe that Felix probably would have pointed that out if the other party was in the White House, though he does temper his enthusiasm a bit in the paragraph below the chart.

Posted by realist50 | Report as abusive

The question is why in the worst recession in 60 years did our population grow by 3.6 million in 1 year. Why have we not limited our immigration until the economy actually needs the workers.

Posted by PCDallas | Report as abusive

The economy works in cycles just like most everything else.We are in the up turning cycle and Obama being in full campaign mode will take all the vistory laps he can, taking credit where no credit is due. The title should read, Jobless Rate Drops Inspite of Obama.

Lack of leadership and experience should be apparent to all the non-coolaid drinking public.

Posted by EagleDriver | Report as abusive

Cooked numbers.

Felix, why don’t you report how long at the current rate of job creation it will take to get back to pre-recession levels? 8 years? 10 years?

Workforce participation is still very low. Many people that are 50+ or under 25 just don’t bother looking and are uncounted. I have neighbors in this bucket.

The report is hardly “fantastic”. Use that word after a few months at 300-400K new jobs and increased participation.

Posted by upstater | Report as abusive

I’ll take any good news on the economy right now!

Posted by VoltairesGripe | Report as abusive

Karl Denninger on this report here ( 201459 )

Karl: “Indeed, the total number of employed persons fell. A lot. To put a number on it, the total number of employed persons fell by 737,000 by actual count.

Now the cheerleaders will state that this is a common thing in January, and indeed it is. But the correct adjustment is to look at the population increase and subtract that back off as well. In other words, we take the loss of employment and add the population growth. When we do this we get a whopping 2.422 million in the wrong direction which was bested only by the -2.618 million in January of 2009 through the process of this downturn!

In fact other than January 2009 there has never been a single month in my table, which dates back to 1999, that put up a worse combined number. This “performance” rates a literal “second from utter despair and disaster”, and the employment rate shows it:”

Posted by Foppe | Report as abusive

It’s just amazing how far one can come with cooked numbers. I’m not only not buying the top, but even now selling it. US credibility has just jumped off the cliff like a lemming would.

Felix, take a good look at the participation rate and the BLS adjustment towards 16-24 and above 55 age groups. Don’t clap because everybody else.

Posted by FBreughel1 | Report as abusive

Abbott and Costello Discuss UNEMPLOYMENT Figures…

COSTELLO: I want to talk about the unemployment rate in America.

ABBOTT: Good Subject. Terrible Times. It’s 9%.

COSTELLO: That many people are out of work?

ABBOTT: No, that’s 16%.

COSTELLO: You just said 9%.

ABBOTT: 9% Unemployed.

COSTELLO: Right 9% out of work.

ABBOTT: No, that’s 16%.

COSTELLO: Okay, so it’s 16% unemployed.

ABBOTT: No, that’s 9%…

COSTELLO: WAIT A MINUTE. Is it 9% or 16%?

ABBOTT: 9% are unemployed. 16% are out of work.

COSTELLO: IF you are out of work you are unemployed.

ABBOTT: No, you can’t count the “Out of Work” as the unemployed. You have to look for work to be unemployed.


ABBOTT: No, you miss my point.

COSTELLO: What point?

ABBOTT: Someone who doesn’t look for work, can’t be counted with those who look for work. It wouldn’t be fair.


ABBOTT: The unemployed.

COSTELLO: But they are ALL out of work.

ABBOTT: No, the unemployed are actively looking for work… Those who are out of work stopped looking. They gave up. And, if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you’re off the unemployment roles, that would count as less unemployment?

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don’t look for work?

ABBOTT: Absolutely it goes down. That’s how you get to 9%. Otherwise, it would be 16%. You don’t want to read about 16% unemployment do ya?

COSTELLO: That would be frightening.

ABBOTT: Absolutely.

COSTELLO: Wait, I got a question for you. That means they’re two ways to bring down the unemployment number?

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo.

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to just stop looking for work.

ABBOTT: Now you’re thinking like an economist.

COSTELLO: I don’t even know what the hell I just said!

Posted by eatabanker | Report as abusive

Well done, eatabanker.

Posted by VoltairesGripe | Report as abusive

Another crummy report. Your cheerleading is premature.

Posted by colburn | Report as abusive

Cute eatabanker, but those who are jobless, looking for jobs, and available for work are the unemployed and it has been that way since 1940.

Those who are pregnant and wishing to stay home for 2 years do not wish to be employed and should not be counted. A man who decides his wife makes a better salary and decides to stay home should not be counted.

Someone who is unemployed but states to the employment census taker he is no longer looking for at least a month is also not considered unemployed, since 1940… not since Obama came into office.

The samplings are just that and are not accurate, but give a fairly good indication of the states unemployment and employment levels.

Sadly Reuters has a lot of GOP faithfuls who who search for anything positive in the jobs market and comment. They wish you to forget that Bush was in office long enough to blow up the economy and thus make Obama responsible for not recovering from Bush’s blowout sale on the middle class whilst coddling the rich.

Cheer-leading is premature as it will take a decade or more to recover.

Posted by youniquelikeme | Report as abusive

PS: I forgot to add, for those who are focusing on the word ‘fantastic, that besides possibly meaning superb or excellent (as most Americans might use it) it also means bizarre, fanciful, strange and unreal…

Posted by youniquelikeme | Report as abusive