The new July unemployment numbers from the Bureau of Labor Statistics were released today. The BLS servers promptly crashed, another spectacular triumph for your $3.7 trillion deficit-fueled federal government. Technicians are scrambling to replace vacuum tubes and reel-to-reel tapes as we speak. In the basement of BLS headquarters, a guy wearing horn-rimmed glasses held together by tape is waving a fistful of punch cards and screaming at a fat technician wearing a Mrs. Pac-Man T-shirt.
Meanwhile, various news sources report the carefully massaged “official” U-3 unemployment rate dipped from 9.2% to 9.1%, while the real U-6 rate dropped from 16.2% to 16.1%.
Payrolls rose by 117,000 jobs, which is better than the 85,000 jobs projected for July, and much better than the horrifying 46,000 jobs added in June. The May and June totals were also revised upward by 56,000 jobs.
The Associated Press describes these results as follows:
The mild gain may ease investors’ concerns after the Dow Jones industrial average plummeted more than 500 points over concerns that the U.S. may be entering another recession.
Still, the economy needs twice as many net jobs per month to rapidly reduce unemployment. The rate has topped 9 percent in every month except two since the recession officially ended in June 2009.
The unemployment rate fell partly because some unemployed workers stopped looking for work. That means they are no longer counted as unemployed.
To be specific, the economy currently needs to add about 250,000 jobs per month to keep pace with population growth in the workforce. That means last month, we fell 133,000 jobs short of “reducing unemployment” at all, never mind “rapidly.”
In fact, as the AP notes, a big reason for the .1% decrease in unemployment rates is “because some unemployed workers stopped looking for work.” How many? The AP doesn’t see fit to mention the number, but Bloomberg does: “193,000 people left the labor force.”
In other words, the number of discouraged job seekers who left the labor force was much larger than the number of new jobs added. 117,000 jobs were added, but we lost 193,000 job seekers. Why isn’t that the headline?
Of course, the Administration will tout the new job report as proof of the wondrous power of Obamanomics, and clear evidence that we won’t be having that double-dip recession after all. Beating projections by 56,000 jobs will be the only thing they talk about. Losing 76,000 more job seekers than jobs created will not be mentioned at all. Neither will falling 133,000 jobs short of overall employment growth.
And, of course, we’ve got the inevitable “revisions” of today’s job numbers to look forward to. Not only do the figures naturally change as more data becomes available, but the government has been known to play games with the numbers, to produce good headlines with the initial report.
I believe these manic spin attempts are one of the reasons for market instability. Serious investors don’t just read the headlines. There’s a difference between positive spin designed to boost market confidence, and outright delusion. Watching the Administration trumpet this dismal July report as fabulous news will only reinforce its reputation for incompetence and confusion. It’s like having the doctor who paralyzed you in a botched operation pop a champagne cork because you can wiggle your little toe a bit.
Update: Tyler Durden at ZeroHedge pulls another grim conclusion from the data: the average length of unemployment has reached an all-time high of 40.4 weeks. Combined with the shrinking workforce, what we are seeing here is the rise of a growing class of “unemployables.” Those people leaving the work force are not re-entering it.