Four Things to Know About the July Jobs Report

Today is the first Friday of a new month (i.e., Christmas for wonks and political junkies), which means the Bureau of Labor Statistics (BLS) has released its monthly report on employment. The economy created 163,000 net jobs in July, an increase over projections—which hovered around 100,000—and a substantial increase over June, when the economy added a scant 80,000 jobs. The unemployment rate remains unchanged at 8.25 percent (up from 8.21), but was rounded up to 8.3 percent for the purposes of the report. This isn’t a good number—a more rapid recovery would require up to 300,000 jobs a month—but it is a sign that the United States is not about to fall into another recession.

Beyond the topline number, here are a few key things to take away from this month’s report.

The revisions were … meh: The BLS revises its job statistics as it gets more accurate information. Today, job growth for May was revised from 77,000 to 87,000, but job growth for June—the most abysmal month of the year—was revised down from 80,000 to 64,000. That number could go back up, but regardless, it’s a sign that that the economy slowed considerably at the beginning of the summer.

The household survey wasn’t great: The jobs report consists of two things—the establishment survey, which collects its information from a sample of non-agricultural businesses, and the household survey, which samples 60,000 eligible households to provide a picture of the employment situation. The downside of the household survey is that it is more imprecise. The upside is that it captures everyone in the economy, from the self-employed and unpaid family workers, to agricultural and private household workers. If you take the household survey—where employment declined by 195,000—and adjust it to reflect the establishment survey, then the economy created 108,000 jobs in July. As always, this is subject to revision. The actual number could go up or down.

Public payrolls are still declining: The public sector is a significant drag on the economy, but not in the way conservatives might think. The economy actually grew by 172,000 jobs in July, but this was offset by the 9,000 jobs shed by states and localities. Overall, the public sector has lost 648,000 jobs since Obama entered office. If those had been saved—by stimulus and aid to states—then the unemployment rate would be near 7 percent, due to the domino effect of jobs begeting jobs (teachers need supply stores, which need workers, etc.) The American Jobs Act would alleviate some of this by providing billions in new funds to states. But this has been rejected by congressional Republicans. By contrast, the plans passed by GOP lawmakers, and adopted by Mitt Romney, would slash public employment and add a heavier weight to further economic growth.

There is genuine good news: It’s not all doom and gloom. Joblessness fell from 14.4 percent to 14.1 percent for African Americans, and from 11 percent to 10.3 percent for Latinos. Wages also went up slightly, by 2 cents, and the duration of unemployment fell from 19.8 weeks to 16.7.

As for the politics? Don’t expect anything to change. Because of the higher unemployment rate, Republicans will continue to attack Obama for his stewardship of the economy. But the greater number of jobs will allow Democrats to make an argument about the relative strength of the economy, compared to the Bush years: from 2001 to 2008, the economy saw net private sector job losses of 646,000. By contrast, under Obama’s tenure, the economy has seen net gains of 332,000.

Not that this will matter for voters; typically, impressions about the economy are set in stone by the end of the summer. Barring dramatic change, voters will evaluate Obama on the basis of the economy as it stands now.

One last thing. Earlier this week, the Federal Reserve said it would not act to stimulate the economy. This jobs report underscores the extent to which that is a mistake. Both inflation and unemployment are at non-optimal levels, as defined by the Fed. An open-ended promise to print money—and thus a higher inflation target—would push businesses to hire and individuals to spend. It wouldn’t fix our problems, but it would raise the ceiling on economic growth, which is being held down by the Fed’s monomaniacal focus on price stability.

The Fed’s refusal to act will condemn millions to needless immiseration. Unless they’re content with mass suffering, now is the time to do something.

Comments

If you keep setting your expectations lower and lower you will eventually excede them and exceeding lowered goals is not an improvement. If we didn't creat 300,000 new jobs a month (and that's a minimum) our economy is failing and going backwards.

Public sector jobs are at risk in many states (see California) as there is not enough money to pay the current employees because of pensions promised to now retired employees.

Some IBD #S to know. Truth should matter. Don't argue with me on these #'s go to investors.com for the details.
http://news.investors.com/article/621034/201208031859/real-unemployment-much-higher-than-white-house-claims.htm
Since Obama has entered office, some 1.1 million payroll jobs have disappeared.
Businesses have created 151,000 new jobs a month on average — way BELOW the 300,000-plus per month job CREATION in a typical recovery-expansion.
Take the 163,000 "new" jobs Obama took credit for. That number comes from a monthly survey of businesses. But it's NOT a pure number. To get it, the government has to ESTIMATE the number of jobs CREATED by new businesses. It also ADDS SEASONAL ADJUSTMENT factors.
The 163,000 figure becomes even more suspect when you consider that 150,000 people LEFT the workforce in July — something that almost NEVER happens when the economy is EXPANDING and creating NEWjobs. In short, the 163,000 "new" jobs is a MIRAGE due mostly to seasonal adjustments — NOT REAL JOBS.
Nor is this a one-month phenomenon. Since Obama stepped into office, 7.5 million people have LEFT the workforce — calling all the administration's claims of job "gains" into question.
What Obama didn't mention was that the monthly employment survey of households — which is used to create the unemployment rate — shows a stunningly DIFFERENT picture than the business payroll data.
By this household measure, the number of jobs PLUNGED by 195,000, pushing the unemployment rate up to 8.3% from 8.2%. So talk of job gains is deceptive.
But the government also releases what it calls the U6 measure — one that takes into account discouraged workers and those who, as the Labor Department puts it, are "marginally attached" to the labor force.
What does U6 show? It shows an ALARMING 15% unemployment rate — with 23 million people having no job. Worse, the U6 measure of unemployment is rising as the economy slows down.
As we noted, there's been a decline in labor force participation under President Obama — a decline that isn't adequately accounted for in the official data.
What would happen if the labor participation rate remained at 65.7% — its level when Obama entered office — instead of the 64.3% currently?
FOR THE LAST 3 MONTHS MORE PEOPLE WENT ON SS DISABILITY THAN GOT REAL JOBS.

You need to be logged in to comment.
(If there's one thing we know about comment trolls, it's that they're lazy)

Connect
, after login or registration your account will be connected.
Advertisement