Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
That September Jobs Report was Weirder Than You Know
Sam Ro over at Business Insider notes that a 0.3% or greater decline in the unemployment rate in a single month has occurred nine times since 1990 and four times since 2000, including last month.
I decided to go back and look at those instances. Here are the five during the 1990s:
1. 7.6% to 7.3% in October 1992. Economic backdrop:
– GDP growth was 4.2% in 3Q
– Household employment fell by 92,000
– Net new payrolls increased by 178,000
– The labor force participation rate fell to 66.2% from 66.5%
2. 6.4% to 6.1% in May 1994. Economic backdrop
– GDP growth was 5.6% in 2Q
– Household employment rose 574,000
– Net new payrolls increased 333,000
– The LFP rate rose to 66.6% from 66.5%
3. 5.6% to 5.3% in June 1996. Economic backdrop:
– GDP growth was 7.1%
– Household employment rose 358,000
– Net new payrolls rose by 279,000
– The LFP rate stayed flat at 66.7%
4. 5.5% to 5.1% in August 1996. Economic backdrop:
– GDP growth was 3.5%
– Household employment rose by 225,000
– Net new payrolls rose by 197,000
– The LFP rate fell to 66.7% from 66.9%
5. 4.7% to 4.3% April 1998. Economic backdrop:
– GDP growth was 3.6%
– Household employment rose by 395,000
– Net new payrolls rose by 278,000
– The LFP rate fell to 67.0% from 67.1%
What we see in these five 1990s examples is that they occurred during periods of strong growth, with GDP growth averaging 4.8%. That strong growth usually generated, in turn, strong job gains in both Labor Department job surveys. October 1992 was a bit of an exception because of the decline in jobs as measured by the household survey (the one they use to calculate the unemployment rate). But that drop was offset by a huge decline in the LFP rate.
Now let’s look at the four instances when the unemployment rate fell sharply during a period of weak economic growth:
1. 9.9% to 9.6% in May 2010. Economic backdrop:
– GDP growth was 2.2%
– Household employment rose by 34,000
– Net new payrolls rose by 516,000
– The LFP rate fell to 64.9% from 65.1%
2. 9.8% to 9.4% in December 2010. Economic backdrop:
– GDP growth was 2.4%
– Household employment rose by 283,000
– Net new payrolls rose by 120,000
– The LFP rate fell to 64.3% from 64.5%
3. 9.4% to 9.1% in January 2011. Economic backdrop:
– GDP growth was 0.1%
– Household employment rose by 110,000
– Net new payrolls rose by 110,000
– The LFP rate fell to 64.2% from 64.3%
4. 8.1% to 7.8% in September 2012. Economic backdrop:
– GDP growth is probably between 1% and 2%
– Household employment rose by 873,000
– New new payrolls rose by 114,000
– The LFP rose to 63.6% from 63.5%.
What we see here is that modest growth generated modest jobs gains, and the drops in the unemployment rate were helped along by declines in the labor force participation rate.
Except for last month. In September, we got a weird combination of weak growth, a rising labor force participation rate and otherworldly job gains as measured by the household survey.
It is a puzzler and suggests we may see a reversion or correction when the next job report comes out the first week of November.
Published in General
Yeah, that’s weird. Maybe it’s the increase in part-time jobs, burger-flipping jobs rather than manufacturing jobs, and many people giving up, or becoming sick with worry about not having a job?
Apparently it is wonton frying rather than burger flipping.
First, look at the educational breakdown.
Unemployment of people with college degrees remained the same (4.1%). The big employment gains were for people with less than a high school diploma (11.3% from 12.0%). High school graduates, some college, and associate degree holders had just a .1% drop.
That’s bizarre. What are all these jobs for dropouts? Even if true, shouldn’t the press be trashing this as creating low-wage burger-flipper jobs.
Second, look at race.
Blacks had a 0.7% drop, whites 0.2%, Asians 1.1%, and hispanics 0.3%. That’s odd. I would have thought that the Obama amnesty would have added a big number of latinos to the official employed figures.
Third, the number reporting only part time work “Slack work or business conditions” actually went up. How is that a recovery?
Is there a secret government program to hire black and asian high school dropouts? Perhaps, they are drawing salary as Obamaphone distributors. ;-)
http://www.bls.gov/news.release/empsit.a.htm
4. 8.1% to 7.8% in September 2012. Economic backdrop:
– GDP growth is probably between 1% and 2%
– New new payrolls rose by 114,000
– The LFP rose to 63.6% from 63.5%.
The household employment rising by 873,000 in September, 2012 seems unbelievable. It’s leaps and bounds more than any monthly increase in household employment we’ve seen in the past two+ decades.
4. 8.1% to 7.8% in September 2012. Economic backdrop:
– GDP growth is probably between 1% and 2%
– New new payrolls rose by 114,000
– The LFP rose to 63.6% from 63.5%.
The household employment rising by 873,000 in September, 2012 seems unbelievable. It’s leaps and bounds more than any monthly increase in household employment we’ve seen in the past two+ decades. ·2 minutes ago
Exactly.
Methinks someone’s cooking the books to make the boss look good.
I think this is nothing to see here. I think the point is that if this type of jump has happened 4 times in the last 2-3 years it is not that unusual. No one thinks the economy is doing that well because of this one number.
I think you need to review the article, paying particular attention to the “Household employment rose” line for each incident. You’ll see a really big anomaly in the last one.
No, it suggests the labor dept. fudged the numbers, and maybe they’ll do it again in early Nov, but once past Nov 6, they’ll say oops, and in Dec post sort of real numbers.
What we also need to see is the detailed algorithms for all of the raw number tweaking that goes on. There is huge grey area there to have funny business. We should not forget that Radical leftists are generating these numbers and history shows they lack a committment to accuracy.
I would say that it doesn’t matter. People don’t care about the statistics nearly as much as they care about whether they are unemployed or underemployed or have a close family member who is.
I wouldn’t take any bets on these numbers staying after the revisions come in. Shhh! Don’t tell anyone they weren’t real, though. The MSM surely won’t mention it.