Curb Your Economic Enthusiasm

The November unemployment numbers released this morning showed 146,000 new non-farm payroll jobs being added and the unemployment rate dropping to 7.7 percent. It’s a sign of the times — and how anesthetized we are to our current economic torpor — that this number feels good despite the fact that it’s still objectively miserable (if you want to see this trend on steroids, look no further than here in California, where champagne glasses have been clinking over the fact that unemployment went down to 10.1 percent in October).

But there’s a hitch. There’s always a hitch. Per Keith Hall, Senior Research Fellow at the Mercatus Center at George Mason University:

Disengagement from the labor force does continue to be a problem as participation dropped from 63.8% to 63.6%. Participation remains at a very low level and has dropped by 0.4 percentage point so far this year. Labor force dropouts were entirely responsible for the November decline in the unemployment rate to 7.7%. This widespread disengagement plus the fact that 40% of unemployed have been job hunting for over six months will make for a very, very long road to full labor market recovery.

I guess when you consider that we have an administration whose foreign policy is defined by “leading from behind,” it makes it slightly less surreal that their economic policy is defined by growth through contraction.

  1. Barkha Herman

    Troy – how dare you refute numbers?  You must be one of those anti-science conservative types.

  2. Austin Murrey

    I think I’ve heard that replacement of the work force requires us to add 125,000 new jobs per month to remain static with population growth – that is each month 125,000 people should be coming into their majority where they should have a job.

    If that’s true I figure that means we really created about 21,000 jobs in excess of what’s necessary so our work force would have to be 10,500,000 to account for the decrease in unemployment of 0.2%.  And that just doesn’t seem right so either my figure is totally wrong (entirely possible) orsomething else has to be happening.

  3. Joseph Paquette

    Employment at all levels of government rose over  in the last five months.  This is not noted in many of the ‘good’ news stories going around. 

    In June, a total of 142,415,000 people were employed in the U.S, according to the BLS, including 19,938,000 who were employed by federal, state and local governments

    In the same five-month period since June, the number of people employed by government increased by 621,000 to 20,559,000.  

    These 621,000 new government jobs created in the last five months equal 73.3 percent of the 847,000 new jobs created overall.

  4. Lavaux

    Labor force dropout bringing the unemployment rate down is the same as the Fed subscribing to the lion’s share of the Treasury’s bond issues: Printing money? Not us! Right now we’re living in the Smoke and Mirrors Era. Tomorrow reality will come calling. Ready for the call?

  5. Copperfield

    Troy… full analysis here on Ricochet

    …average monthly job growth in 2012 is +151K, right in line with last year’s rate of +153K.  Job growth spiked to +226K in 1Q12, slowed to just +67K in 2Q12, but has recovered some and is averaging +158K the past five months.  While a welcome improvement, this is still just barely over the level of job creation needed to accommodate population growth each month.  At a +151K rate of job growth and a constant labor force participation rate, it will take the economy about seven years to get to the 2001-2007 average unemployment rate of 5.2%, and over two years to get to 7.0%.

  6. Copperfield
    Austin Murrey: I think I’ve heard that replacement of the work force requires us to add 125,000 new jobs per month to remain static with population growth – that is each month 125,000 people should be coming into their majority where they should have a job.

    If that’s true I figure that means we really created about 21,000 jobs in excess of what’s necessary so our work force would have to be 10,500,000 to account for the decrease in unemployment of 0.2%.  And that just doesn’t seem right so either my figure is totally wrong (entirely possible) orsomething else has to be happening. · 1 hour ago

    The civilian labor force decreased -350K last month, which accounted for the drop in the unemployment rate. 

  7. Copperfield
    Joseph Paquette: Employment at all levels of government rose over  in the last five months.  This is not noted in many of the ‘good’ news stories going around. 

    In June, a total of 142,415,000 people were employed in the U.S, according to the BLS, including 19,938,000 who were employed by federal, state and local governments

    In the same five-month period since June, the number of people employed by government increased by 621,000 to 20,559,000.  

    These 621,000 new government jobs created in the last five months equal 73.3 percent of the 847,000 new jobs created overall. · 1 hour ago

    The report published by the BLS each month is the result of two surveys; the Establishment (Payroll) survey which reports the number of jobs created and the Household survey which reports the unemployment rate.  The above figures are an attempt to divine the number of jobs created from the Household survey, a sort of apples and oranges approach.  The Establishment survey shows the net number of jobs created in government the last five months was +34K. 

  8. Pseudodionysius

    Doctors after the Melian massacre noticed a sharp drop in Melians complaining about head colds and aches and pains.

  9. Mr. Dart

    11.1%  

    That’s what current unemployment would be if the labor participation rate was 66%– where it was before the late 2008 economic downturn.