Friday, February 3, 2012

Unemployment Rate Drops to 8.3%

The drop in percentage seems good, especially paired with some solid job growth numbers. There is a fairly disturbing number in the report though, 1.2 million people dropped out of the labor force. That means we are discouraging our way out of the recession. It also means that the recovery, when it happens, will be slightly masked by the numbers moving in the other direction. We will know the economy is getting better when people start joining the workforce, once again hopeful that their job search is not in vain. That will increase the unemployment rate, but for positive reasons.

"The US economy had a good month for job creation in December, according to the new report this morning from the Bureau of Labor Statistics. We added 243,000 net jobs and the unemployment rate fell two-tenths of a percent to 8.3%:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.

"A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation."

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