I’d like to be able to give a full explanation for the suddenly lower unemployment rate that came out in the Bureau of Labor Statistics (BLS) report last Friday. But there are too many unanswered questions.
Here’s the summary: Instead of the 113,000 jobs economists expected, US employers hired 114,000 workers. And then, for reasons not explained well enough so I can re-explain, jobs numbers for July and August were adjusted upward (from 96,000 to 142,000 for August, plus from 141,000 to 181,000 for July, a total upward adjustment of 86,000 jobs, which is nearly as many total new jobs counted for August).
In August the workforce participation rate fell to 63.5%, the lowest since September 1981, near the end of the final Carter budget. There are about 3 million fewer people employed today than in 2007, before the downturn in the economy hit. But, low and behold, in September the rate ticked up to 63.6%. The difference isn’t an actual rise, however, since it’s statistically insignificant. It’s a non-factor, which means that this time the unemployment drop theoretically can’t be due to fewer workers competing for jobs (which lowers the unemployment percentage even though fewer people are employed). The 114,000 new hires is less than enough to keep pace with population growth, so it’s not a stunning number.
The Commerce Department adjusted down 2nd quarter GDP growth to 1.3% and indicated that the third quarter was on track to remain approximately flat. There are no economic indicators that the economy is heating up.
But there’s this other number that BLS reports: 602,000 new employees hired by federal, state, and local governments (despite universal budget shortfalls at all those levels) for the combined August-September months. It’s the largest 2-month increase in 20 years. And, when you add it all up, that makes 873,000 new workers for the month of September. (I’m not sure what they’re adding all up; I can’t get that number from any of the data I’ve read summarized.)
As Jack Welch has been criticized for pointing out, isn’t it a coincidence that there’s a record low labor force participation rate, a record high government employment growth, and a record high job growth (using the 873,000 figure)—records spanning decades in all three categories, and the convergence all in the same reporting period? The result is unemployment at a new relative low, after remaining above 8% for 43 straight months (since January 2009, when Obama took office, coincidentally). And the report comes out just the month before the presidential election. That’s a lot of coincidences.
But it leads me to even more questions:
· What has this president done to be trusted enough for the public to believe these numbers?
· If the president has had any control over actual unemployment, such that he could suddenly make the rate drop now, why did he wait 43 months to do it?
· If we’re supposed to believe the president is to be credited with this monumental control over unemployment rates, why does he stop at 7.8%, which is higher than any other president since Carter had to deal with? In Texas we’ve been under this rate for a while (around 7.1%), and compared to full employment of 3-5%, this still feels pretty bad.
· If the administration has managed to “cook the books,” (a phrase Austan Goolsbee used against the Bush administration in 2003 under much less suspicious circumstances), why do it so pathetically poorly and also so obviously timed for political gain?
It’s these unanswered (unanswerable?) questions that explain why there’s not more talk this week about the booming economy.
In unrelated news, I read that the President was quite satisfied with his debate performance, thought he’d done well, and is disappointed to learn that, while he assumed only substance would matter, it turns out the public was paying more attention to style. I did not make this up.