Hurray! Unemployment is still 9.1%. It didn’t get any worse!
The new unemployment numbers are out, and the “cooked” U-3 unemployment rate remains at 9.1%. It’s been 9.1% for three months in a row, and it’s been hovering around 9% since April 2009, with occasional spikes above 10%.
You can imagine how the media would be reporting this under a Republican president. The latest month of 9.1% stasis would be portrayed as evidence of a dismal economic quagmire. The headlines would all be some variation on “Unemployment Remains Stuck At 9.1%, Desperate Americans Hope For Change.”
Instead, this month’s numbers are being trumpeted as, if not wonderful news for President Obama, then at least cause for mild optimism. Reuters, which serves up the grim news fairly straight in its article, nevertheless chose a headline of “Payrolls Rise in September, Jobless Rate Steady.” The idea that “rising payroll” would be the first thing mentioned in a headline about a Republican president reaching twenty-nine straight months of unemployment above 9% is laughable. Somehow I doubt they’d choose the adjective “steady” to describe that jobless rate, either.
The New York Times likewise declares, “U.S. Adds 103,000 Jobs; Rate Holds Steady At 9.1%.” CNN’s headline also accentuates the positive, although at least they don’t try to imply some sort of comforting “steadiness” in the jobless rate: “103,000 Jobs Added Last Month; Jobless Rate Still 9.1%.”
MSNBC wins the smiley-face headlines prize: “Employers Create 103,000 Jobs In September, More Than Expected.” Wow, that’s awesome! For bonus points, they throw in a hilarious quote from an economist as a sub-head: “This is good news and we’ll take it, but it’s not enough to erase the risk of recession.” God, I hope our wonderful “recovery” isn’t in jeopardy! Maybe some House Democrat should hurry up and sponsor Obama’s jobs bill!
The “economist” quoted by MSNBC, incidentally, is Diane Swonk of Mesirow Financial, which just happens to be headquartered in Chicago. Here’s a display of her stunning economic wisdom from November 2008, when she was gushing over Obama’s “deep economic bench.” Stop laughing – that’s the headline she used.
President-elect Obama will be announcing his economic team on Monday. Many of the details have already been released: Tim Geithner at Treasury; Larry Summers as National Economic Chair (NEC) – Rubin’s first job under the Clinton administration; Peter Orszag as the White House Budget Director. I have already commented on Tim and Larry, both of whom are extremely competent (Larry was a boy genius, and has shown some mellowing with time).
I have gotten to know Peter during his tenure at the Congressional Budget Office, and he is better than good. He is humble, but terrific on the budget. His specialty is health care, and many a health care economist has told me he has taught even them a thing or two about health care costs and the economy. This is a particularly wise and bold choice for the Office of Management and Budget, as he will push for a balanced budget and fiscal restraint – not the most politically easy path to pursue these days.
Obama has chosen a combination of those with proven records from the Clinton administration, and just great economists.
Here’s what Swonk’s crystal ball told her lay on the horizon for 2009 and beyond:
The recession will get worse before it gets better, and even having a deep economic bench can’t do much to stop that. The financial system remains particularly unstable.
Obama has proven, however, that he is willing to do what he can to make the right decisions going forward. Indeed, the next fiscal stimulus plan is likely to look more supply-side than Keynesian when all is said and done. He has not only hinted at making his tax cuts permanent (or as permanent as anything is in tax policy), but that he will put the tax hike he proposed on hold. (Many of those in the highest income brackets have already dropped out of the wealthiest of households anyway.)
I mean it – stop laughing. We have serious matters to discuss here.
One of those serious matters is that all these headlines about “103,000 jobs added” are extremely misleading… no, let’s not mince words, they’re outright lies. Once you dig into the articles, you’ll find that the 103,000 number includes 45,000 striking Verizon union employees returning to work. Now, their departure was counted in last month’s numbers, so it would be fair enough to include them in computing the overall employment level, but by no stretch of the imagination were their jobs “added” or “created.” There is simply no way to torture logic, or the English language, enough to use those terms.
The true number of jobs added was about 58,000, which is not “unexpected job growth” that “exceeds expectations.” It’s almost exactly what was expected in forecasts. It also represents net job loss when compared to population growth. So would 103,000 jobs, for that matter. The number required to add jobs in excess of population growth is somewhere between 125,000 and 200,000, varying somewhat from month to month.
That’s one reason we can “add” thousands of jobs without budging the unemployment rate. The other reason is that the widely-cited U3 unemployment metric is a fraud, carefully massaged to exclude people who have dropped out of the workforce entirely – i.e. the people who gave up looking for a job. The true unemployment rate, measured by the Bureau of Labor Statistics’ U6 metric, went up last month. It rose from 16.2% to 16.5%, and has been steadily rising for months. There’s nothing “steady” about it at all.
Here’s a brilliant graph from Suitably Flip that makes it all very easy to understand. Flip graphed both the unrevised and revised official numbers for July, August, and September, then factored out the striking Verizon employees, to produce the green line in the graph. He describes this as “not a rebound, but a swift and steady decline in job growth in recent months.”
Ponder that green line, and ask yourself if an honest media would expect you to feel anything other than outrage over its trajectory.