Key Highlights:
- The unemployment rate fell to 7.8%. Non-farm employers added only 114,000 new jobs. In spite of the low number of new jobs, the unemployed rate dropped because of the revisions to July's and August's numbers. July's total jobs added figure was adjusted upward from 141,000 to 181,000 while August's total jobs added figure was adjusted from 96,000 to 142,000. For these two revisions, added 86,000 new jobs to the numbers.
- The number of unemployed persons fell to 12.1 million.
- The civilian labor force participation rate also increased to 63.6% from 63.5% in August.
- The "Not in labor force" (those who have no job and have stopped looking for work) fell 211,000 from 88,921,000 to 88,710,000.
- The number of persons employed for part-time economic reasons (those that are considered part-time involuntary workers) jumped by 600,000 from 8 million in August to 8.6 million in September.
My Opinion:
While this will certainly be trumpeted as good news by the media and the Obama administration, and it is good news; any time people get back to work, even if it's in part-time, low-paying jobs, it's a good thing. This certainly isn't a boon for the president. It should not be taken that way. To me, this is the equivalent of being beating handily in a football game, and then scoring a touchdown on the final drive while losing 52-35. We scored some points. Unemployment has fallen from its high of around 10%. But now, according to the unemployment rate, we are exactly where we started, and there are less people participating in the civilian labor force. Sadly, Mr. Obama... families can't live paycheck to paycheck on low-paying, part-time jobs, and we can't look for a "recovery" jobs report to jobs report. We need to feel it across the aggregate, and we need the to get the gears of this economy turning for a full recovery.
Many people are already questioning these numbers. While I do not think they are part of some move or gimmick by the current administration to get the numbers below 8%, I can see why people are scratching their heads, and I can certainly see why people would lose a little trust. On the surface:
We only created 114,000 new jobs, but the rate fell to 7.8%?
July's number was off by 26.4?% August's number was off by 48%?
Again, I must reiterate that I don't think this is an intentional move, but I can certainly understand people's feelings of "how can we trust these numbers when the last two months alone were off by 26% and 48%."
As far as delving into the numbers deeply to explain this math, I will do my best to get into them. It might take time, and I hope I can get to it :-)
I did find one take that I do support. Please read this write-up here: http://www.ijreview.com/2012/10/18256-breaking-september-jobs-report-released/
What I agree with:
"If the number of unemployed dropped by 456,000, but only 114,000 jobs were added, that means that 342,000 people left the workforce in some fashion. Couple that with the fact that the number of part-time workers saw an increase of 582,000 while manufacturing unemployment saw a decrease of 16,000 jobs and this drop in unemployment rate begins to looks less and less optimistic, and more like a misleading mathematical equation.
In 2012, employment growth has averaged a gain of 146,000 jobs per month, a drop from the average monthly gain of 153,000 in 2011. Given these numbers, the 114,000 jobs added in September begin to look worse and worse, regardless of what the often-misleading unemployment rate says.
The much more telling U-6 unemployment rate, which accounts for unemployment, underemployment, and those marginally attached to the workforce, remained the same at 14.7 percent. That 7.8 percent number does not include so many factors and does not tell the whole story. For instance, if a worker should be employed full time but could only find part time work in September, they helped the “unemployment rate” decrease from 8.1 to 7.8 percent, but they would not have changed the U-6 number at 14.7 percent.
Share your thoughts, feelings, and analysis below."
Hi LME
ReplyDeleteThese numbers make absolutely no sense to me!
The jobs 'created' numbers are a bit below what the 'economists' predicted... but their 'predictions' with 115,000 new jobs estimated the new unemployment #'s would be like - 8.2%.
Sooo, HOW - if we created 1,000 LESS jobs (which is IMO overall pitiful) - did our UE rate DROP to 7.8%?
You're the numbers guy, perhaps you could explain this to a retard - like me?
Hey Dara,
DeleteThe main reason is from the revision of the numbers in August. An additional 96,000 jobs were added in August than were previously reported.
It is true that as you said the economists expected 115,000 jobs to be added in September, but there wasn’t expectation for a high revision of August. So with news that 114,000 were added in September AND a revision of an additional 96,000 jobs added for August, it was well beyond expectations.
Adding in that revision was an 'unexpected' bonus that nearly doubled the number of jobs. Revisions are rather common, but many of the revisions for the trailing months actually resulted in slightly lower counts... so such a high revision is great news.
Also, I think unemployment was at 8.1% to begin with so the drop is not as significant as it seems. I'm not sure where that 8.2% number came from as unemployment would have had to increase to get there.
DeleteI think the 8.2% was because the economists say we need 250,000 jobs a month to keep up with population growth and the 115T they predicted did not fill that requirement. Maybe it's me, but 96,000 'adjustment' + 114,000 this month = 200,000 which STILL looks like it falls short of the break even goal... with an additional .3% drop?
DeleteOn the heels of Obama's crappy showing at the debate - and the following day's campaign stump fact-deficient calling of Romney a liar to save face....this, IMO looks pretty 'hinky'...
Just to preface once again, this post is more my general view than particularly addressing LME or what was said here.
ReplyDeleteMy general view on these issues is, if you judge and criticize the man and his performance when the job report is poor, and use that as evidence for other arguments, you can't fairly ignore it when a job report is ‘good.’ It isn’t fair to only view evidence as credible when the numbers are in your favor (but this tends to be incredibly common in politics).
Whether or not the numbers are truly accurate or fairly represent the economic health of the country, also shouldn’t only be something that tends to be brought up when you don’t like the numbers. These methods to calculate unemployment and participation rates have been the same for literal decades, and isn’t anything new.
That said, I do agree that this unemployment rate isn’t the best representation of economic health, but at the same time people need to realize that it was never intended to be. We can blame politics and the media for making people think it is far more than anyone else (much less any single President/administration). And when you judge a president/administration/party harshly by that figure and use it as a weapon when it is bad, you really can’t be surprised/astonished when that same president/administration/party turns around and uses it as a performance factor when it is good.
Of course, that still leaves what should be the real debate here... over whether unemployment should be lower/should’ve recovered more quickly.
As far as the ‘conspiracy’ aspects… just realize that the liberal equivalent of that conservative view, is the people that think that the Bush administration was directly behind 9/11.
*And just to be fair here*
DeleteTo make it completely clear, my initial statement of course goes both ways. I
'm certain that this administration will trumpet this as great news and try to use it to their advantage, but with that I hold them to the view I mentioned here. If next month the unemployment rate goes up and/or the job report is poor, then they better be prepared to have that used against them and with fair motive (as in previous months). Same principle: can't only choose to acknowledge things when they're in your favor.
Good morning. I just wanted to jump in with a comment before I go to another meeting... Yes, a meeting on a Friday - Ugh.
ReplyDeleteThe real only thing that I want to say is that I most definitely don't believe these numbers are "good." This has nothing to do with me being a conservative, and it isn't politics. It's economics.
I'm a numbers guy. Numbers always need context. Just as I've always said, if everyone looking for a job just simply quit, the media would trumpet an unemployment rate of 0.0%. But with regards to this report, frankly, it's much of the same. Trusting the numbers aside (to me, it's not really about trust - I trust that they are now accurate; I just question why such huge changes each month)...
We had a summer pick up (according to the revised numbers). It was small. People keep forgetting that we need 150,000 new jobs just to keep up with inflation. In fact, the population growth for the previous month (top line, table A in the report) increased from 243,566 to 243,722. That's 206k new people who simply came into the population of the US. Below that, we see that 418k new people entered the workforce. And most importantly, the economy created 582,000 part-time, low wage jobs. As far as context, these are things that cannot be ignored. These data showed that many people that were on the sidelines came back into the labor market looking for a job, and they were gobbled up with small, part-time, low-wage jobs. This is what I'm referring to. 7.8% sounds wonderful, and it will make Obama supporters happy... but economically, this is the 2nd straight month of job growth declines since July, and this report showed a massive increase in underemployment. In a sense, we basically took those people who "gave up looking for work" and put them into the "underemployed" category. I'm not sure how this is seen as positive news for our economy... democrat or republican leanings aside.
I hope this helps Dara :-) That's just my take for now... I do need to look into it further. Darn meetings! LOL
DeleteThanks LME... my puny brain leans to the abstract/numbers are far too complex and rigid for me sometimes....you did help me to understand.
DeleteThere's something else that I didn't think about initially. We're coming up on the Halloween/Thanksgiving/Christmas shopping seasons, and Halloween is now the second best shopping season for retail stores. They'd be starting their seasonal hiring, and that could explain the 'gave up looking for work's' popping back into the workforce - temporarily.
However - if that IS the reason for the drop to 7.8 (the same as when O took office) then the chance of it popping back up above 8. around the end of Jan is a pretty awful scenario - no matter WHO wins the election.
Just came across this tweet from Wolf Blitzer and thought you, Dara and LME (as well as others), would be interested to see it.
DeleteHope you all have great weekends!!!
OOPS!!! - Did Bureau of Labor Statistics cook the jobs numbers? @AliVelshi has strong views on this. Watch 6PM ET hour of @CNNSitRoom
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