Unemployment Rate Drops Below 8% Amid Weak Jobs Growth
September's BLS Report will likely be significant but, behind the numbers, things don't look all that great.
The last time U-3, the unemployment number reported by the Bureau of Labor Statistics that gets the most attention when jobs numbers are reported each month, was below 8% a guy named George W. Bush was President and the world was in the middle of the most serious economic downturn since the Great Depression. For the next 40 odd months, the economy continued to shed jobs and the unemployment rate skyrocketed to near 10%. Even in the several years that the economy has been in “recovery” jobs growth has been incredibly weak, with an average of just 153,000 jobs created per month in 2011, and a current average of about 142,000 per month for 2012 to date. Both of those numbers are far below the numbers we’d expect to see from a health economy and, as we’ve seen for several months, the U-3 rate was falling largely because there were large drops in the Labor Force Participation Rate representing people who were essentially giving up on looking for work.
With July and August both being relatively weak, the September report was looked at as a sign of exactly where the economy was headed. On balance, it was a mixed bag:
The unemployment rate declined by 0.3 percentage point to 7.8 percent in September. For the first 8 months of the year, the rate held within a narrow range of 8.1
and 8.3 percent. The number of unemployed persons, at 12.1 million, decreased by 456,000 in September. (See table A-1.)Among the major worker groups, the unemployment rates for adult men (7.3 percent), adult women (7.0 percent), and whites (7.0 percent) declined over the month. The unemployment rates for teenagers (23.7 percent), blacks (13.4 percent), and Hispanics (9.9 percent) were little changed. The jobless rate for Asians, at 4.8 percent (not seasonally adjusted), fell over the year. (See tables A-1, A-2, and A-3.)
In September, the number of job losers and persons who completed temporary jobs decreased by 468,000 to 6.5 million. (See table A-11.)
The number of persons unemployed for less than 5 weeks declined by 302,000 over the month to 2.5 million. The number of long-term unemployed (those jobless for
27 weeks or more) was little changed at 4.8 million and accounted for 40.1 percent of the unemployed. (See table A-12.)Total employment rose by 873,000 in September, following 3 months of little change. The employment-population ratio increased by 0.4 percentage point to
58.7 percent, after edging down in the prior 2 months. The overall trend in the employment-population ratio for this year has been flat. The civilian labor
force rose by 418,000 to 155.1 million in September, while the labor force participation rate was little changed at 63.6 percent. (See table A-1.)The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.0 million in August to 8.6 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
On the job creation side, things were a little less positive:
Total nonfarm payroll employment increased by 114,000 in September. In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011. In September, employment rose in health care and in transportation and warehousing. (See table B-1.)
Health care added 44,000 jobs in September. Job gains continued in ambulatory health care services (+30,000) and hospitals (+8,000). Over the past year, employment in health care has risen by 295,000.
In September, employment increased by 17,000 in transportation and warehousing. Within the industry, there were job gains in transit and ground passenger transportation (+9,000) and in warehousing and storage (+4,000).
Employment in financial activities edged up in September (+13,000), reflecting modest job growth in credit intermediation (+6,000) and real estate (+7,000).
Manufacturing employment edged down in September (-16,000). On net, manufacturing employment has been unchanged since April. In September, job losses occurred
in computer and electronic products (-6,000) and in printing and related activities (-3,000).
As CNBC notes, there are some seeming contradictions in these numbers:
Job growth remained tame in September, with the economy creating just 114,000 net new positions though the unemployment rate fell to 7.8 percent.
The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number.
The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions.
But the government said the total number of jobs employed surged by 873,000, the highest one-month jump in 29 years. The total of unemployed people tumbled by 456,000.
The labor force participation rate, which reflects those working as well as looking for work, edged higher to 63.6 percent but remained around 30-year lows. The total labor force grew by 418,000, possibly accounting for the relatively modest net level of job growth.
Economists were expecting 113,000 more jobs and the rate to rise to 8.2 percent.
One explanation for this is likely the revisions to the jobs reports for the previous two months. July’s number was revised upward from 141,000 net jobs created to 181,000 net jobs created. August, meanwhile, was revised upward from 96,000 net jobs created to 142,000 net jobs created. That’s a net increase for those to months of 86,000. This number is likely what accounts for the large part of the reason that the unemployment rate itself dropped given the fact that job growth in September was pretty weak and the labor force participation rate was relatively unchanged from where it was a month ago, putting it at a rate nearly as low as it was 30 years ago. Incidentally, if the Labor Force Participation Rate were at the same rate it was when Barack Obama took office, the unemployment rate would be 10.7%. Additionally, U-6, the broadest measure of unemployment is at an unacceptable 14.7%.
As this chart from Ed Morrissey shows, the U-6 report is still far from being in recovery mode:
Another factor that appears to be playing a large role in the drop in U-3 is the fact that there was a fairly large increase in the number of people employed part-time:
The household survey showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual Census population adjustments. Some 582,000 Americans took part- time positions because of slack business conditions or those jobs were the only work they could find.
So, when you look at the numbers in detail, there’s not a whole lot of really good news here. Job creation is still far behind where it needs to be for the labor market to even be said to have started to recover from the impact of the Great Recession, the fact that we’ve seen manufacturing job creation go negative for two straight months now is something that should be a of great concern, and the fact that such a large segment of the eligible work force remains on the sidelines tells us that we’re still far away from the end of the jobs crisis. At the same time, though, there’s no denying that this report takes the jobs numbers below the psychologically important 8.0% level, and it robs the GOP of a talking point that they’ve been able to use for years now.
The political implications of all of this are rather clear. Slow jobs growth and people giving up looking for work are not good news for an incumbent President, and a pretty ripe opening for the Romney campaign. This month’s jobs report was deemed to be among the most important pieces of data between now and the election. With many states already beginning early voting, it may even be more important than the one that will be released on November 2nd, just four days before the election. If the numbers had come back bad, then it would have been bad news for the President on top of what was universally deemed to be a disastrous debate performance. Instead, much like Mitt Romney at the debate, the President has gotten a reprieve. Despite the fact that the actual numbers aren’t very strong at all, these numbers are likely to inure to the benefit of the President and may even help to undercut some of the negative reactions to Wednesday’s debate. What they mean for the future of the American economy regardless of who becomes President is, of course, another question.
Given the error bars on the numbers when they first come out, I’ve become inclined to simply ignore them.
X new jobs, +/- roughly X doesn’t tell you all that much.
The revised numbers tell you more, but by then it’s “old news.” Meh.
Well, it’s a helluva lot better for the economy to be creating jobs than to be losing them, that’s for sure. Although September’s net payrolls gain of 114,000 is extraordinarily weak (you need around 150,000 merely to keep pace with population growth) the household survey showed a whopping gain of 873,000 last month, of which around 320,000 were net part-time jobs added.
As far as the politics of all this, hell, you can’t even talk politics anymore without the context of the left-wing bias of the media-academe complex. Today there will be liberals in the media and on college and university campuses actually celebrating a headline 7.8% unemployment rate. The amazing irony being that back in September 1992 — the “it’s the economy, stupid!” election — the headline unemployment rate was 7.6%. Go figure.
Agreed, Rob.
More, the biggest spike that pushed things down below 8% is all in part time jobs.
As Romney said, this morning, this isn’t what a recovery looks like.
I think this report goes to show why it isn’t really the report itself that matters. The report provides a media talking point, but that’s it. Everyone was talking about the poor August numbers… but now the August numbers are completely different. Which August number should the mood of the electorate reflect?
I tend to always consider these numbers baked into the pie already.
The drop below 8% unemployment is the biggest political story here. Talking about other metrics is too “in the weeds” to have any impact on the presidential race.
Also, the addition of 80k jobs retroactively signals that the recovery is stronger than was reported in those two months. We may see September revised upwards later on.
Now, is it good enough? No. But the Obama campaign isn’t making that claim.
The “political implications” are that Romeny can no longer use the argument that Obama should not be president because the unemployment rate is below 8%. PERIOD!
You live by the simple numbers, you die by the simple numbers. Relevant context need not apply!
So basically, this critical report doesn’t have any information that makes sense, it’s a crapshoot, and relying on it as a barometer of the President’s performance is fallacy?
Soon as the jobs report came out, Intrade swung sharply from 65-35 to70-30, and still trending up for Obama.
So…
….in other words….
We’re right back to where we were last week at this time.
@LaMont:
Meant “is NOT below”..
I have one question for you Doug and Tsar and Florack…
Once again, while the private sector is adding jobs, public sector hiring is flat.
That’s exactly what you claim to want.
But at the same time;
Add in public sector growth that happens in ever other recovery and we are in 6-something% range. The feedback loops start firing…growth accelerates.
You want to shrink government. That’s what we are doing.
You want to shrink government and have stupendous growth?
Well, that leaves me with my question; when has that ever happened?
If you can’t answer that then you probably should just STFU.
@C. Clavin:
Couldn’t have said it better myself!
I don’t very often agree with Rob, but this is one of those cases. Much like “core inflation”, these numbers don’t really tell us much.
Even if that number is clearly a fabrication?
PLease.
Overall, these are not great numbers but better than nothing. Unfortunately, I give it about 4 hours before there will be claims of manipulating the numbers by the Government. It is depressing to think that we all have sunk into such a degenerate reasoning state that there are no facts anymore but just feelings and the manipulation of those feelings.
Rate Plummets to 4.3% — For Govt Workers…
1980-81, as an example..
@Eric Florack:
Besides being a partisan drone, on what analysis are you relying to claim that the BLS is engaging in potentially illegal fabrications?
@Scott:
You were off by 3 hours and 59 minutes. They’re already out asking for the report’s birth certificate.
@Scott: Four hours? It’s already happened on Twitter. Jack Welch tweeted two hours ago suggesting “those Chicago guys” had something to do with it.
Heh. I think “core inflation” basically does what it’s supposed to do (commodities are left out for a reason. That’s a feature, not a bug).
But anyway: you can spin these numbers either way you want (unemployment dropped, earlier job gains revised up YAY, or weak jobs growth still, part time jobs driving numbers, BOO) basically because we’re still where we’ve been for a while: muddling through.
There still is a staggering amount of household debt holding the economy back. You can’t get consumer spending up unless households have money to spend. That means paying down debt, rising wages (both would be nice), or… (this scares me) piling on more debt to fuel consumption.
Unless one is willing to attack that with government policy, there isn’t much to do but wait. Liberals want to spend money on stimulus, Conservatives want tax cuts. Libertarians presumably want nothing in particular but will take tax cuts I’m sure. Greens want to basically bring back the CCC.
@Geek, Esq.: I didn’t suggest the BLS is doing so. Rather, I’m saying the WH is twisting the BLS stats… as they have since they gained power. When has the WH for example, ever made reference to the U6?
And I’m hardly the only voice making the charge
Its quite incredible how deeply in denial the right wing are. Obama shows proof of his birth in Hawaii? Clearly some form of shenanigans is to blame. Polls don’t show Romney winning? More shenanigans. Jobs numbers aren’t helpful to our preferred candidate? OMG Chicago Thugs Shenanigans!
Its kinda sad. See also Jack Welch going all Donald Trump on twitter.
@Eric Florack:
Number 1 – Base on what?
Number 2 – Even if there is the slightest possibility that the numbers could be fabricated. The point of my comment is that Romney put way too many eggs in that basket during his campaign. Romeny is the one who looks foolish becuase of it.
@Eric Florack:
You gotta be kidding me. Government spending *exploded* in the 80s. You want to cherry pick 1980-1981 as if it means something, but there was a nasty recession (Fed-induced) in 1982, followed by recovery… driving in no small part by deficit spending (tax cuts + spending increases). Hell, it was basically the blueprint Bush the Lesser tried to follow.
@Eric Florack:
You said that the BLS’s unemployment number below 8% is ‘clearly a fabrication.’
The BLS is run by career civil servants, with no political appointees involved in its numbers. So, fail x2.
@Jen: I always try to look on the bright side of life. Thoroughly depressing. Winter is coming and I need to get the SAD machine out to spare my liver.
When the hell has any Presidential administration pointed to U6 numbers? That’s something the challenger always tries to use. U6 is always higher than headline.
I remember Dems going on about the U6 numbers under Bush coming out of the 2001 recession. Why? They were out of power, and U6 is a scarier number. Always is.
Florack…
As is per usual…you are wrong.
Public sector jobs grew in ’81, and ’90, and 2001. This is the ONLY recovery when they have not.
http://www.washingtonpost.com/blogs/ezra-klein/post/public-sector-austerity-in-one-graph/2012/06/11/gJQAv89NVV_blog.html
It’s funny. If we followed the same path Reagan, Bush I and Bush II followed, unemployment would be lower. But we haven’t, in no small part because Republicans will not accept that path (note: I think Obama is uncomfortable with that path as well, actually. He’s liberal, but neo-liberal. I too wonder how many times you can go to that well).
I accept the BLS numbers. I believe that they are as accurate as they can be given the sample and guidelines. The Household survey is always a bit fuzzy, as there’s no way to no whether the person on the other end of the line is being truthful – sort of like political polls. I put a lot more faith in the Establishment survey, which targets businesses. Still, the BLS lists its “confidence interval” for the Establishment survey at plus or minus 100,000, meaning that BLS is 90% confident that the “real” number of non-farm jobs that grew/declined is going to be somewhere between 14,000 and 214,000.
If only golf had that kind of scoring.
@KRM:
Exactly. It’s X, plus or minus X.
Heh. “No way to know….”
I crack me up.
http://www.motherjones.com/kevin-drum/2012/10/chart-day-2-public-sector-shrinking
There can see on the chart, a recent small uptick in public sector jobs. The trend, however, has been downward, with a brief spike for the census.
This is totally inconsistent with the idea that the Obamamonster is blowing all our money on public sector jobs.
There is no 21st century CCC. The stimulus (almost 40% of which was tax cuts) was not a massive government hiring program (indeed, some on the Left find fault for precisely that reason).
I look at what has been done since the recession hit and am hard-pressed to think of how this should enrage Conservatives. It doesn’t actually make rational sense, if you actually care about policy.
Which is the problem, I know. I know.
@LaMont
LOL… At what point do they mention the number of folks dropped out of the workforce.. the U6?
@C. Clavin: Here’s a clue: Ezra Klien is likley the least honest blogger on the web, save perhaps Andrea Sullivan. You’ll score no points citing anything from him.
Oh… and by the way.. an interesting political ramifications point I found pouring over the spreadsheets this morning…. The unemployment rates for Hispanics is at around 11 percent, and for blacks at around 15%. Now, that is far worse than when Obama took office. This is important, because these are the two blocks Obama thinks he’s got a lock on.
@C. Clavin:
It’s also the better reflection of the state of the economy. Wouldn’t you agree?
@Eric Florack:
At what point did they ever mention this. Was it not good for Romney as long as it was above 8%?
Florack…
Now you are changing the subject…because you know you are wrong…again…per usual.
Tell me when the economy boomed while at the same time shrinking government.
Or STFU.
Those are two blocks he *does* have a lock on, largely thanks to folks like you, Eric. In a USA in which the GOP actually cared to craft policy to help those groups, it could make inroads. But the GOP expressly rejects such an approach. The bed has been made.
As for Ezra: reject him if you wish. You don’t get to reject the data, though. Government spending went way up under Reagan. And the national debt tripled, if I recall correctly. You cannot point to the economic growth in the 1980s and fail to acknowledge those facts… if you’re intellectually honest, that is.
Under Republicans we were losing hundreds of thousands of jobs. Now we’re adding tens of thousands of jobs. But that’s not good news because a mathematical model based on completely unrelated historical events fantasizes that we would be adding more jobs if only we had a time machine and this was some entirely different year.
Of course the details behind the numbers are lousy. But, who goes behind the curtain to see these things? It’s like the Wizard of Oz, where there is a little man with a big imposing voice who rules, until the very end, when he is finally visually exposed.
The jobs numbers are being propped up by part time work and what appears to be sheer manipulation of figures to achieve that whimsical 7.8 EU number. But, then again, once this election is over, and people finally take their finger out of the dike, when companies like Lockheed are allowed to post their delayed lay-off notices, that EU number will undergo yet another magical transformation — upward.
I note Dale Franks this morning, who is far more the economist than anyone in here, myself included…
@C. Clavin: No, I’m not changing the subject, there’s a lot of threads here under discussion.
I’ve answered your question. And, if you’d like to compare that to our freinds to the north, Canada, who after learning ia the burned hand about the fallacy of Keynesian economics, grew their economy by shrinking government. That Canadian boom only ended when Obamanomics dragged Canada into the recession with us. And know what? They’re recovering faster than we are, by a wide margin.
Yes, I do. Find another source.
Reagan did just this. And of course never gets credit from you guys because to do so, to use suchfacts runs afoul of your political aspirations.
Now, given the facts as shown by BLS, would you care to explain how Obama has “Helped” these groups? (Hint… Food stamps don’t count)
What’s so stupid about this alternate universe theorizing is this insistence that if we “look behind the numbers” we see a bad moon a ‘risin. You know what? We never looked behind the numbers when jobs were being added. I don’t recall people warning that the job increases didn’t count because they were part of a housing bubble and therefore were not real jobs.
If you want to really be honest about the employment picture you’d say that we created a whole hell of a lot of jobs out of vapor, out of the expectation that housing prices would go up forever. Then, when the bubble popped we lost those phony jobs. And what we have now is bubble-free reality.
@jan: What’s wrong, Jan? Usually when you post your vicious lies, you find some right-wing hack to quote to “prove” what you’re saying. This time your lies are so outrageous you can’t even find a mouthbreather at Red State to say them first? Pretty pathetic, even for you.
Lmao at the outrage on the right about the jobs report.
Guess what? BLS reports have always been done like this. There will be revisions up or down in the next couple of months.
Got to admit, the sight of bithead puckering up to vacuum weld his lips to the posterior of a “RINO” has some mild entertainment value…
Doug, I disagree with you on a couple of points.
First, the unemployment rate and the jobs created/lost are compiled from two separate surveys. The first is a survey of households and the second a survey of businesses. So much like Gallup and Pew, usually the surveys will tell similar stories but occassionally have different movement. But the underlying numbers are good news in either case. Maybe not enough to cause a .3 drop in unemployment in a single month. But I don’t think there is any way to look at this is not good news.
Second, because of the data smoothing that the BLS uses in adjusting the numbers seasonally, revisions tend to be correlated. That is, a positive adjustment to July this month means that another positive revision to August and September is somewhat more likely next month.
And the best news is that all of this is virtually incompatible with another recession in the short to medium term.
Did you ever give Jimmy Carter credit for appointing Paul Volcker? Or admit that he inherited an economy that had been trashed for years? It’s hard to insist on intellectual honesty in others when you are a prover serial liar.
First, what specific policy are your referencing here? EITC? If so, you have to square that with modern-day (since the 90s, really) GOP opposition to the EITC. If you’re referencing some other policy, please explain.
Second, I’m happy to give credit when it’s due. I love what Reagan did on nuclear arms control and how he handled diplomacy with the USSR, for instance.
The stimulus and temporary payroll tax cut helped those groups as well as others. If you’re looking for specific policy targetted at those groups, there is very little (there was the recent move with respect to kids of illegal immigrants). If he HAD done any such things, you’d have been screaming bloody murder. So dishonest. So totally dishonest.
I mean, seriously. Imagine an alternative reality in which Obama and the Dems put through policies and the result was that black and hispanic Americans unemployment rates fell more than white Americans. Now imagine the reaction to that amongst Conservatives (and Indies, for that matter). The freakout would be EPIC.
Unemployment in those demographics is always above the regular numbers. I figure that’s largely about educational attainment (see also: unemployment rates broken down by education).
Are you actually disputing that government spending rose dramatically under Reagan? This used to be something Conservatives noted, while arguing that it was a good investment to bring down the USSR and that we could then enjoy a “peace dividend” afterward (and to an extent we did, and then the GOP screamed about Clinton “hollowing out” the military).
In the 1980s, the US federal government ran deficits. It did this partly due to recession, partly due to tax cuts, and party due to increased government spending. You cannot pretend this is not so. During that time, the economy did fairly well (it wasn’t the 50s or the 60s, but it was solid). This is not something you can disconnect from the deficits run by the feds during that period! A chunk of that 80s prosperity you love so much was produced via deficit spending.
This is really basic stuff.
Hat tip to a commenter on Balloon Juice:
The unemployment rate is now the same as it was in January 2009 and is heading lower. That means the Obama Administration can say that they have turned things around and that from here on in things will get better
This is a stake through the heart of the Republican argument that Obama made things worse.
Whats more, they did it with the Republicans fighting them all the way, so the Republicans get zero credit for any improvement in unemployment.
I can fully understand why the conservatives are desperately contesting the good news on unemployment . Their cynical ploy to sabotage the economic recovery for political gain has failed.
Now on to a Democratic retake of the House!
No freaking way.
Romney: 114K? Not enough.
Welch: 114K? Obviously inflated.
Gives me a headache trying to keep up.
Fun fact:
When Reagan crushed Mondale in 1984, the unemployment rate was 7.5 per cent (down from a high of 10.8). The Unemployment rate now is 7.8 per cent (down from 10.00). It may not be “morning in America ” yet (this recovery is less robust) but it may be dawn.
Jan once again proves that she is nothing but a blinkered partisan.
@ bk…
Actually Romney is right…it’s not enough.
And it won’t be until we start adding public sector employment to the mix…as we have in every single other recovery before this one.
The one bright spot of a Romney Presidency is that the Republicans will then do what they always do…spend tons of money and grow the government. And the economic recovery will then accelerate.
Unfortunately he would also allow the neo-cons to get us into another war of choice…and appoint a bunch or right-wing nutjobs like Scalia to the SCOTUS.
Frankly I’ll settle for a slow recovery if that’s what it takes to prevent the other things.
I notice this point hasn’t been addressed, perhaps because it is one of the most accurate things written on this thread…of course, I understand why Republicans/conservatives wouldn’t want to address this point, as they can’t explain why minorities vote so overwhelmingly for Democrats without insulting those groups…
Speaking of Scalia…
jan:
You must be assuming that Mitt is going to lose, since Ryan promised that they would prevent “retroactively prevent that sequester from taking place in January,” if they are elected (link).
Why so pessimistic?
florack:
The irony is staggering, given your long record of posting fabrications (example, example, example).
I’ll be waiting patiently while you go looking for proof about him remotely as vivid as the proof I just cited about you.
rob:
Yup. Saint Ronnie tripled the national debt, as you said. This is why 75% of the debt Obama inherited was created by three presidents: Reagan, Bush and Bush.
Exactly. Those are three who created most of our debt.
It’s all very funny. A 7.8 percent unemployment number is better than 8.1 for the same reason that a $7.80 cheeseburger is so much cheaper than one for $8.10.
lolz (laughing at our species)
Translation of Florack: “Damn, as long as the unemployment rate was above 8% the numbers were okay, but now … this is different!”