Unemployment falls below 8

[PeterMP]

That should be in the seasonal adjustment already Peter

IF things are improving we will see the unemployed and participation rates rising as more attempt to get into the job market.
the full times jobs added are below what is needed to simply hold the rate steady

I'm pretty sure that U-6 isn't seasonally adjusted.

As I point out everytime this topic comes up, it isn't surprising that our participation rate is falling.

That's what happens when people retire.

And yes I'm aware of your chart that shows the % of older people staying in jobs is going up, but that percentage still puts them below where we were as a population and a country 10 years ago and even 5 years ago.

[twa]

More gray cloud stuff but what are the nature of the jobs created? Low paying? High paying? Skilled labor? White collar? Minimum wage?

The median wage trend has not been good so far(except in Texas and a few others)

http://usatoday30.usatoday.com/news/...omy/57846600/1

[Wrong Direction]

Jim Pethakoukis is tearing this jobs report apart. Here's some of what he had to say:

http://www.aei-ideas.org/2012/10/the...r-jobs-report/

1...As the Labor Department noted:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

2. And take-home pay? Over the past 12 months, average hourly earnings have risen by just 1.8 percent. When you take inflation into account, wages are flat to down.

3. The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%.

4. The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress? Here is RDQ Economics:

Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.

5. As ... a chart originally produced by Team Obama ... even the artificially depressed 7.8% unemployment rate is way above the 5.6% unemployment rate the White House predicted for September 2012 if Congress passed the $800 billion stimulus package back in 2009.

6. The 114,000 jobs created would have been a good number … but for 1962, not 2012. The U.S. economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project.

7. We are still on pace to create fewer jobs this year than last year. In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011.

8. White House economist Alan Krueger says the jobs numbers are ”further evidence” the economy is healing. But he’s wrong.

The employment-population ratio, which merely shows how many folks have jobs as a share of the civilian population, was 58.7%. Now that’s up from last month. But it is still far below where it was in June 2009, 59.4%,when the recession officially ended. And it’s even further below the 63% level before the downturn.

[steve09ru]

while this is good and progress has been made...we are also right where we were in January 2009 (7.8%) - I'd like to see the total adult #'s compared to total adults employed over the last 8 years...that's where I think you can really tell where everything sits.

And just comparing this to the early-mid 80's: we were at 10.8% in November of '82 and was able to get that to 7.8% in February of '84 (total of 16 months). Compare that to a 10% high in October of '09 - it took us until October of '12 to get it to 7.8% (36 months).

[Elessar78]

The median wage trend has not been good so far(except in Texas and a few others)

http://usatoday30.usatoday.com/news/...omy/57846600/1

from the article:

The big drivers of red state income growth: energy and government benefit payments such as food stamps.

???

[PeterMP]

Unseasonally adjusted U-3 fell from 8.2 to 7.6%. Unseasonally adjusted U6 fell from 14.6% to 14.2%.

Seasonally adjsuted U-3 fell from 8.1% to 7.8% and U6 was unchanged at 14.7%

http://www.bls.gov/webapps/legacy/cpsatab15.htm

So people saying U-6 is unchanged are looking at the seasonally adjusted number.

[Wrong Direction]

More from Peth...
http://www.aei-ideas.org/2012/10/eco...istical-quirk/

here is the entire, eye-opening note from economists John Ryding and Conrad DeQuadros of RDQ Economics:

This report is a tale of two labor markets. The establishment survey (payrolls) painted a picture of moderately growing employment over the last three months but at a marginally slower pace than over the last year. At this pace of job creation, the unemployment rate should be barely drifting lower given underlying demographic trends. In contrast, the household survey painted a picture of a sharply falling unemployment rate—down 1.2% points over the last 12 months. Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline. With this report, the ISMs, and vehicle sales, the September economy is off to a better-than-expected start but nowhere near as good as suggested by the decline in the unemployment rate.

Of course, the economy is not growing 4-5%, not even half that. This a jobs recovery built on part-time jobs, falling wages, and disappeared discouraged workers. As JPMorgan’s econ team noted: “The one asterisk to the good news from the household survey was the apparent low-quality composition of the jobs created, as there was a surge in people working part-time for economic reasons, a development which left the widely-followed U-6 broad measure of underemployment unchanged at 14.7%.”

[Wrong Direction]

And finally, this one:
http://www.aei-ideas.org/2012/10/873...white-hot-9-3/

Economic consulting firm IHS Global Insight:

The household employment estimate is subject to a bigger sampling error than the payroll estimate. Its 873,000 increase is a huge statistical outlier on the upside.

Look at it this way: Back in June 1983, the economy added about 900,000 jobs, according to that same household survey. During the second quarter of 1983, the quarter that month falls in, the economy grew at an astronomical 9.3% annual rate. The supply-side Reagan Boom was in full swing.

Right now, in the third quarter of 2012, economists think the economy is growing at an an anemic 1.5% or so. So the economy was growing six times as fast in 1983 when it was adding that many jobs. Hmmmm ….

This is a fraud, people.

[twa]

So people saying U-6 is unchanged are looking at the seasonally adjusted number.

Isn't that what you are supposed to do for a apple to apple comparision?

[PeterMP]

Isn't that what you are supposed to do for a apple to apple comparision?

I think that makes the most sense. I was just trying to clarrify in the context of the previous post.

---------- Post added October-5th-2012 at 02:10 PM ----------

And finally, this one:
http://www.aei-ideas.org/2012/10/873...white-hot-9-3/


This is a fraud, people.

Just real basic stuff, but talking about one thing as a percent (i.e. percentage economy is growing) and another thing as a raw number (i.e. 900,000 jobs) and then try and compare them just shows a poor understanding of how to think about numbers and do data analysis.

If somebody was going to do that and try and make the argument that it was actually a useful comparision, they'd better be willing to come up with some good reasons why doing that makes any sense w/ respect to the particular numbers they presenting.

A basic example- Given the same percentage growth the state of TX is going to produce more jobs in absolute terms then the economy of DE growing the same percentage amount.

The US and the golbal economy are much different than in the 1980's. Right off the bat, the popluation is larger and older.

[DjTj]

More from Peth...
http://www.aei-ideas.org/2012/10/eco...istical-quirk/

The part of this that I disagree with is the outright dismissal of the 873,000 job number from the household survey as "completely implausible." There is likely some volatility (and the BLS itself reports an expected error of +/-100,000 jobs), but the data is what it is, and 600k or 700k jobs would still be good news.

Nobody is saying that the economy is miraculously fixed now, but a 7.8% estimate is better than 8.1%. It is good news even if it is not great news.

For what it's worth, there are a few people offering rebuttals of the job truthers:

Goldman Sachs chief U.S. economist Jan Hatzius isn’t buying the conspiracy theory.

“For the most part, this looks like a genuine move,” he says in a note to clients this morning following the employment report. “It comes alongside large increases in both the labor force (+418,000) and the tally of jobs in the survey of households (+873,000) of which 187,000 was due to government.”

http://blogs.wsj.com/marketbeat/2012...books-on-jobs/

We’ve hit that moment in the election when people begin to lose their minds. Case in point, within minutes of the jobs report, Twitter filled with Republicans claiming the books were somehow cooked, the numbers aren’t real, etc.

Let’s take a deep breath. Jobs reports are about the economy, not about the election. Confusing the two leads to very bad analysis.

This is a good jobs report in a still-weak economy. The 114,000 jobs we added in September aren’t very impressive. The revisions to the last two months, which added 86,000 jobs to the total, were much more impressive. Those revisions also suggest that September’s jobs could get revised up — or, of course, down. So be careful about reading too much into that number. Still, these are, at best, good, not great, numbers.

http://www.washingtonpost.com/blogs/...racy-theories/

This whole controversy is really over about 0.3% in the unemployment rate, and I believe that is within the margin of error. The economy is about the same. It's maybe improving a little bit. That's all we can really get from the data.

[Wrong Direction]

I think that makes the most sense. I was just trying to clarrify in the context of the previous post.

---------- Post added October-5th-2012 at 02:10 PM ----------


Just real basic stuff, but talking about one thing as a percent (i.e. percentage economy is growing) and another thing as a raw number (i.e. 900,000 jobs) and then try and compare them just shows a poor understanding of how to think about numbers and do data analysis.

If somebody was going to do that and try and make the argument that it was actually a useful comparision, they'd better be willing to come up with some good reasons why doing that makes any sense w/ respect to the particular numbers they presenting.

A basic example- Given the same percentage growth the state of TX is going to produce more jobs in absolute terms then the economy of DE growing the same percentage amount.

The US and the golbal economy are much different than in the 1980's. Right off the bat, the popluation is larger and older.

Ok, we'll chalk this one up to a statistical quirk and assume that anemic GDP growth has no correlation with jobs growth. Maybe we're seeing jobs growth leading GDP growth this time around, as opposed to what history would say?

Maybe this is all due to the release of the new iPhone?

I'm sorry, but when numbers like this come out that have no relation to any other economic trend, I get suspicious. There's no law change, economic change, or political change that explains a sudden and sharp change. Perhaps the last two poor jobs reports were also "statistical anomolies" that coincidentally had the effect of making this report look much more positive right in the middle of election season?

As the rest of the Pethokoukis blogs point out, the larger jobs picture is 1) worse now than in 2011 and 2) only appearing better because 1.2 million people (demographically adjusted, so this isn't about old people) have dropped out of the denominator.

[Predicto]

Just real basic stuff, but talking about one thing as a percent (i.e. percentage economy is growing) and another thing as a raw number (i.e. 900,000 jobs) and then try and compare them just shows a poor understanding of how to think about numbers and do data analysis.

No, it shows a very good understanding of how to write a blog for the National Review or any other partisan source (left or right) that is more about driving the narrative than about objective analysis. National Review understands that it is important to blunt this message before it takes hold in the public consciousness as good news for Obama.

You saw the same thing in the left wing blogs that were talking about Big Bird yesterday morning rather than about Obama's flat performance in the debate.

[Wrong Direction]

Nobody is saying that the economy is miraculously fixed now, but a 7.8% estimate is better than 8.1%. It is good news even if it is not great news.

You seem like a nice, reasonable and smart guy (as does PeterMP), so forgive me if I come across the wrong way. However, I don't think this even hits the standard of good news compared to what the economy needs to recover from the great recession. Statistical quirk is about all I can take from this, perhaps with an added description of "relatively good, but only when compared to other putrid recent economic reports."

No, Mr. President, this is not evidence that we need to stay the course. Far from it.

[DjTj]

As the rest of the Pethokoukis blogs point out, the larger jobs picture is 1) worse now than in 2011 and 2) only appearing better because 1.2 million people (demographically adjusted, so this isn't about old people) have dropped out of the denominator.

The piece you cited doesn't say that the drop in labor participation is demographically adjusted. Where did you see that? And how has it been adjusted?

Here is a piece from last month that attributes these numbers to a long-term trend: http://www.realclearmarkets.com/arti...ion_99874.html