Friday, September 7, 2012

Unemployment Rate Drops to 8.1%

The unemployment number dropped by a tenth of a percent, but it appears to be for all the wrong reasons. It looks like we are trying to discourage our way below 8%.

"The Bureau of Labor Statistics delivered yet another disappointing jobs report, this time the morning after Barack Obama’s speech claiming to be taking the nation in the right direction. Only 96,000 jobs were added to the economy, and while the jobless rate edged downward to 8.1%, that came from even more people leaving the workforce:

Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.

The unemployment rate edged down in August to 8.1 percent. Since the beginning of this year, the rate has held in a narrow range of 8.1 to 8.3 percent. The number of unemployed persons, at 12.5 million, was little changed in August. …

Both the civilian labor force (154.6 million) and the labor force participation rate (63.5 percent) declined in August. The employment-population ratio, at 58.3 percent, was little changed.

That’s a new 30-year low in the civilian participation rate, lower than April’s 63.6%. That’s the reason for the decline in the jobless rate. The workforce decline artificially depresses the official unemployment rate. If we had the same level of civilian participation as we did at the beginning of the recovery in June 2009 (65.7%), we’d be looking at a jobless rate of well over 10%. The employment-population ratio dropped to 58.3% in August, not as low as last year’s 58.2%, but still bouncing along a generational bottom. That measure was 59.4% at the beginning of the recovery. Update: The workforce shrank by 368,000.

Interestingly, the U-6 measure declined to 14.7%. As people leave the workforce, that number should increase. Looking at the disconnect between the two, I’d guess that the number of people claiming disability went back up again, too. Looking at the A-6 table, it shows only a 29,000 jump in August, far below the nearly 300K increase in July.

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