Improvement of unemployment to 8.3% is also good. Or is it? The out-of-work number is 12.7 million people. That is as large as the population of Pennsylvania, every man, woman and child in Pittsburgh and Philadelphia and everywhere in between. There was much celebrating going on Friday as the unemployment figure was announced. I saw claims of a 40-48 state sweep by President Obama in 2012 based on the improved number.
What? Yes, 8.3% is good compared to 9.1% where we were. Yes, 8.3% is good compared to the 8.5% economists predicted. But how does it feel to you? Do you see marked improvement in your neighborhood? Does it feel like we are moving out of the Great Recession? Let’s look at some numbers and what you will be hearing about for the next month until the BLS provides more numbers.
Let’s detail some percentages: 8.3%, 15.1%, 11.0%, 8.0%. Some numbers 1,177,000; 1,685,000; and another percentage 63.7%. These are numbers you will need to know to make heads or tails of the spins you will hear for the next number of weeks.
8.3%: January Unemployment published by the BLS after their monthly phone survey. One of the questions they ask is “Did you apply for a job during the time period between x and y?” If the answer is “No.” and you aren’t currently employed, you are considered not looking and not part of the employment work force. Remember that 8.3% is 12.7M people out of the153M who are either working or still looking/applying for work.
15.1%: This is the “Underemployed” or “U-6” number and takes into account those who are working part-time (PT) but want to be working full-time (FT). It also estimates those who are “marginally attached to the Labor Force”, i.e. would start looking again as soon as they can.
This 15.1% has improved from 17.3% a year ago and is still very high.
To get back to healthy, we not only need to get a significant number of the Unemployed back to work, but also many of the ~3M PT employed who are wanting FT employment, plus many of the millions who have given up looking and are not part of the 8.3% and for some not even part of the 15.1%. Watch for OFA to use the chart up on the left with the down bars in red, blamed on Bush and the up bars in green attributed to the policies of this administration.
11.0%: today’s number of January Unemployed if the number of 2008 employees were all still in the game, at least looking for employment. Don't confuse this. Today's 8.3% is lower because so many are no longer looking. If you add those dropouts back in, as if they were still looking, the number would be 11% today.
8.0%: You will hear republican candidates calling out Pres. Obama for the 8.0% bright line he drew in the sand, an unemployment number he claimed when he touted the stimulus projects. You will hear Pres. Obama and Whitehouse Press Sec’y Jay Carney rebutting that his policies have led to the recovery from the worst part of the downturn (a downturn caused by the failed policies of his predecessor, btw.) You decide. Is it feeling like a recovery? Some will say yes and others will say no.
1,177,000 is the adjustment in January to the Labor Force. An adjustment was made to accommodate the 2010 census numbers and in the process it was determined that this many additional people are not in the workforce and not looking for work.
1,685,000 is the number added to the entire population of working age based on the 2010 census. Of this number 508,000 have found work or are looking and 1.2M are not in the Labor Force. Note that this number of people did not drop out in the month of January as some have reported, but are part to a catch up adjustment. There is some debate around the 1.2M number,
63.7% is the participation percentage, meaning what percentage of the working-age* population is participating in the work force, either FT or PT employed. This number at 63.7% is down from a year ago at 64.2% and dropped 0.3 pts in January because of the adjustments just mentioned. The number has not been this low since 1984 and to some, this is the most concerning statistic. Will those long-term out of work be able to reengage in the workforce? BTW, *the working population is considered all 16 and up who are not on active duty or in an elderly, mental, or penal institution. That civilian worker number in January is 242M.
Another bright point from the BLS Jobs Report is that the unemployment rate amongst Iraq and Afghanistan Vets fell from 13.1 to 9.3%, still not low enough, but a nice movement in the right direction.
The impact on mortgage rates Friday was about an 1/8th of a percent. The market during the day today has already recovered more than half of that decrease. The very small net reaction in the market is an indicator that the bond buyers are not seeing this Unemployment “improvement” in the same light as the Whitehouse. The Fed is sticking by thei predictions last week that Unemployment will be between 8.2 and 8.5% on the year.
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