Mixed Message in Jobs Report - The American Spectator | USA News and Politics
Mixed Message in Jobs Report

On Friday morning, the Labor Department announced that the unemployment rate dropped to 9.4 percent, the lowest rate since May, 2009. However, that came along with the information that non-farm payrolls rose by only 103,000, far below the average estimate of economists surveyed which was for an increase of about 170,000 jobs.

There were upward revisions totaling about 70,000 jobs in the October and November numbers.

Interestingly, the unemployment rate dropped for adult men and for whites, but not substantially for adult women (already doing far better than adult men, at 8.1 percent unemployment versus 9.4 percent for men), teenagers (an astounding 25.4 percent), blacks (15.8 percent), and Hispanics (13 percent).

According to BLS, “Employment rose in leisure and hospitality and in health care but changed little in other major industries. Since December 2009, total payroll employment has increased by 1.1 million, or an average of 94,000 per month.” There was a small gain in retail employment after a surprise loss in November. The goods-producing sector was essentially unchanged in December, down 2,000 jobs after being down 5,000 jobs in November. There were small gains in mining and manufacturing, offset by losses in construction, including civil engineering and residential building.

The economy needs to create about 125,000 jobs a month to prevent a rising unemployment rate, so how did the rate drop so much with a gain of only 103,000 jobs?  The number of umemployed dropped by 556,000 jobs in large part due to a drop in the civilian labor force participation rate and increase in discouraged workers, namely people who are not counted as unemployed because they have given up looking for a job.

The next couple of months will be interesting. While economic data is pointing to a recovery of sorts, job growth is not keeping pace. The public looks much more at the unemployment rate than at the number of jobs created, not least because the rate is the number most widely discussed in the mass media. If discouraged workers decide to start looking for jobs again but the economy is still only producing about 100,000 or even up to 150,000 jobs per month, it will not be surprising to see the unemployment rate tick up again.

In the meantime, expect crowing from the Obama administration about the unemployment rate with a few seconds of talk like “but of course job growth is not where anybody would like to be,” a situation for which they are almost entirely responsible.

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