Sunday, August 7, 2011

Unemployment Drops to 9.1%

Sounds like good news, but the reason for the news is anything but. The decline in unemployment rate comes from the way the unemployment is calculated. It was 193,000 people leaving the labor force that is primarily responsible for the decline.

"The US economy produced a net gain of 117,000 jobs in July, cutting the jobless rate a tenth of a point to 9.1%, according to today’s report from the Bureau of Labor Statistics. That beats economists’ predictions of a net gain of 85,000 jobs and maintaining the 9.2% jobless rate from June. The news comes as a welcome, if very mild, positive surprise after yesterday’s falloff on Wall Street.
According to Bloomberg, the decline in the jobless rate comes from a decline in the work force:

Payrolls rose by 117,000 workers after a 46,000 increase in June that was more than originally estimated, Labor Department data showed today in Washington. The median estimate in a Bloomberg News survey called for a July gain of 85,000. The jobless rate dropped to 9.1 percent as more Americans left the labor force, while average hourly earnings climbed 0.4 percent.

That’s one reason why the actual report comes in handy — and why the BLS servers should have been bolstered for the traffic today.

Update II: More from Bloomberg:

The jobless rate declined as 193,000 people left the labor force and the number of unemployed dropped by 156,000. The share of the eligible population holding a job declined to 58.1 percent, the lowest since July 1983.

Don’t expect much cheering over this report on Wall Street, even if you hear it from Pennsylvania Avenue.

To put this in the contexts of the last two years; after rising to %9.5, 'fake' falling to %9.4, rising to %9.7, and then rising again to 9.8%, and rising again to 10.2%, dropping to 10%, held steady, dropping to 9.7%, held steady, held steady again, increased to 9.9%, dropped to 9.7%, fell to 9.5%, holding steady, rising a tick to 9.6%, held steady, held steady again, increased to 9.8%, 'fake' falling to 9.4%, 'fake fallen' again to 9%, dropped to 8.9%, falling again to 8.8%, rose to %9, rose to %9.1, rose again to %9.2, and has now fallen to 9.1%.

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