Unemployment Is Going Down Because People Are Leaving the Work Force

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“I think it was Churchill [whose bust was returned to the British by Obama] who said that the Americans always end up doing the right thing after they’ve tried every other alternative, And that’s true.  We muddle our way through because of messy democracy [there he goes again] and it’s in our nature to be contentious and have these big arguments, but ultimately we choose the right path.  And that’s what the world is counting on right now as well. … we’re going to get there, but I’m going to need all of your help to get there as well.”

~ Barack Obama at a recent fundraiser

 

Update: 4/6: The Department of Labor Statistics claims that the unemployment has gone down to 8.2%. Only 120,000 jobs were created, which is under the 200,000 needed to make a dent in unemployment. The number of unemployed has gone down despite the poor job growth, giving us the reduced unemployment percentage.

It’s mind boggling how, when we created 227,000 jobs last month,the unemployment rate stayed the same but this month we created only 120,000 jobs and the unemployment numbers dropped.

We have a certain number of people in the work force or who want to be and a certain number of jobs created. The numbers should not be this illogical. These numbers are seasonally adjusted unlike Gallup and Gallup uses a smaller sampling group. Still….Why did the unemployment drop when seasonal adjustments and other factors differentiating Gallup from BLS do not account for the difference (and they don’t)?

The reason is that the number of people not in the labor force is at an all time high of 87,897,000. [BLS Work Force Participation Data]

 Welfare nation, here we come!

US Department of Labor Statistics

HOUSEHOLD DATA

Table A-15. Alternative measures of labor underutilization

[Percent]

Measure

Not seasonally adjusted

Seasonally adjusted

Mar.

2011

Feb.

2012

Mar.

2012

Mar.

2011

Nov.

2011

Dec.

2011

Jan.

2012

Feb.

2012

Mar.

2012

U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force

5.7

4.9

4.9

5.3

5.0

5.0

4.9

4.8

4.6

U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force

5.8

5.1

4.8

5.4

4.9

4.9

4.7

4.7

4.5

U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)

9.2

8.7

8.4

8.9

8.7

8.5

8.3

8.3

8.2

U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers

9.7

9.3

8.9

9.4

9.3

9.1

8.9

8.9

8.7

U-5 Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force

10.6

10.2

9.7

10.3

10.2

10.0

9.9

9.8

9.6

U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

16.2

15.6

14.8

15.7

15.6

15.2

15.1

14.9

14.5

NOTE: Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule. Updated population controls are introduced annually with the release of January data.

 

 

Original Story: 4/3: Get where? High unemployment and high gas prices makes it hard to get anywhere I want to go. We are told that we are on a slow path to recovery and that seems to be true except when we have this backsliding and it seems like it’s no recovery at all. Aren’t jobs supposed to be number one?

In a prequel to the Department of Labor report, The Gallup numbers, not seasonally adjusted show an increase not an improvement.

 

I heard Fox News Contributor and dedicated Democrat, Kirsten Powers, talk about how we are going in the right economic direction and, while it’s a slow recovery, it’s moving in a positive direction. She should have checked the Gallup poll before saying that. Gallup’s numbers are not seasonally adjusted. They have gone from 8.6% in mid-January to 9.1% in mid-February.

It’s the largest month-to-month Gallup increase since 2010. The government numbers, which will be out on Friday, are always lower because they compute differently (with seasonal adjustment and they do include a larger sampling).

10.0% are working part time but want full-time work. This percentage is similar to the 10.1% in January, but is higher than the 9.6% of February 2011.

 

This is the longest streak of 8%-plus unemployment since the Great Depression. The U.S. economy hasn’t been below 8% unemployment since Obama took office in January 2009. And back in May 2007, unemployment was just 4.4%.

As people cannot find jobs, they are leaving the work force completely and the participation rate – the actual workforce – is decreasing. It the work force included as many people as it did four years ago, the unemployment rate would be close to 11%.

American : –

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.4%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.5%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.9%.

5. Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment. According to their model—as displayed in the above chart, updated—unemployment should be around 6% today.

6. As Ed Carson of Investor’s Business Daily points out, it’s been a whopping 49 months since the U.S. hit peak employment in January 2008. The average job recovery time since 1980 is 29 months, not including the current slump.

7. And how long might it take to get back to the 4.4% unemployment rate that existed under President George. W. Bush? Well, let’s say the goal was to get back to that rate in 5 years. And let’s assume the LFP rate returns to the CBO trend. According to a jobs calculator created by the Atlanta Fed, the U.S. economy would have to generate about 225,000 jobs a month, every month, for the next 60 months to hit that target. But few economist think we’ll see sustained job growth like that, especially since it assumes the economy would avoid recession during that span.

Indeed, JPMorgan just cut its GDP forecast for this quarter to 1.5% from 2.0% and says there is “some downside risk” to its second-quarter forecast of 2.5%.

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