Digging Deeper Into the Better-Than-Nuthin’ July Jobs Report
After the U.S. stock market turned in the single worst day since the 2008 financial crisis, the new jobs report released on Friday by the Bureau of Labor Statistics showed that employers created 117,000 jobs in July and that the unemployment rate dipped slightly from 9.2 percent to 9.1.
That’s led outlets like CNN Money to call it “a welcome piece of good news” and the Wall Street Journal to opine “these aren’t great numbers, but they are better than they could have been.”
And while a more robust job creation number is nothing to sniff at, if you dig a little deeper it’s evident that the U.S. economy is in a really dire place right now. The unemployment rate dip had nothing to do with job creation. Its result was directly related to people leaving the workforce.
Here are a few stats worth chewing over that paint a fuller picture of the economy.
David Wessel pointed out that the employment-population rate is “down to 58.1%, lowest since ’83.” Also, the labor force participation rate in July was 63.9%, the lowest it’s been since January 1984.
So not only is participation in the workforce for people 20 years or older down to the lowest level in 30 years, but also the percentage of people in America with employment is below 60%. That’s just staggering. In other words, if more people were “technically” participating in the labor market, the unemployment rate could be 11% or higher.
Economist Justin Wolfers reports that the long-term unemployed (six months or longer) still account for a staggering 44% on the unemployed in America. If you have a job hold onto it, because it could be a long time before you see another one.
So, while the job numbers look positive — new jobs in July! — ultimately, it just means things aren’t getting drastically worse. Remember, the Obama administration needs to add 16 million jobs over the next five years (250,000 jobs per month) just to get back to the same job level as December 2007. Granted, the 2007 job level was inflated by various bubbles, which eventually sank the economy in 2008, but it just goes to show the long and painful road ahead back to recovery.
Friday’s report is another indication that this isn’t a time for politicians to be squabbling over debt ceilings and budget cuts, but rather a time to get serious about job creation.
What’s been perplexing most economists over the last few years is the reports of America’s growing GDP coupled with the lack of job creation. It turns out that the GDP hasn’t really been growing at all either.
“For 2007-2010, real GDP decreased at an average annual rate of 0.3 percent; in the previously published estimates, real GDP had increased at an average annual rate of less than 0.1 percent,” the Bureau of Economic Analysis reports. So all along they’ve been saying the GDP has been growing around 1.3 percent…and now? Not so much. That’s why there have been few jobs created, the unemployment rate continues to increase and people continue to drop out of the labor force.
Click over to the next page for more stunning numbers and analysis…
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