The streak is over, but that is very misleading.
- The number of unemployed persons (12.1 million) dropped by 456,000.
- The number of persons unemployed (2.5 million) for less than 5 weeks declined by 302,000.
- The number of long-term unemployed persons (jobless for 27 weeks or more) was little changed at 4.8 million.
- The number of long-term unemployed persons accounted for 40.1 percent of the unemployed.
- Total employment rose by 873,000 in September.
- The Labor Force Participation rate was little changed at 63.6 percent.
- The number of persons employed part-time for economic reasons rose from 8.0 million in August to 8.6 million in September.
If the number of unemployed dropped by 456,000, but only 114,000 jobs were added, that means that 342,000 people left the workforce in some fashion. Couple that with the fact that the number of part-time workers saw an increase of 582,000 while manufacturing unemployment saw a decrease of 16,000 jobs and this drop in unemployment rate begins to looks less and less optimistic, and more like a misleading mathematical equation.
In 2012, employment growth has averaged a gain of 146,000 jobs per month, a drop from the average monthly gain of 153,000 in 2011. Given these numbers, the 114,000 jobs added in September begin to look worse and worse, regardless of what the often-misleading unemployment rate says.
The much more telling U-6 unemployment rate, which accounts for unemployment, underemployment, and those marginally attached to the workforce, remained the same at 14.7 percent. That 7.8 percent number does not include so many factors and does not tell the whole story. For instance, if a worker should be employed full time but could only find part time work in September, they helped the “unemployment rate” decrease from 8.1 to 7.8 percent, but they would not have changed the U-6 number at 14.7 percent.
Expect Obama to brag about the addition of 114,000 jobs and the drop in the (misleading) unemployment rate to 7.8 percent, but don’t be fooled. These numbers are still paltry compared to where they should be, or else the U-6 number would have dropped. As CNBC puts it, “Friday’s report underscored how slowly the jobs market is recovering from the depths of the 2008 financial crisis and likely will stoke increased debate amid the halting gains the latest numbers indicate.”
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