Jobs Growth Is No Excuse to Kill the Recovery

[xchrom]

http://www.bloomberg.com/news/2012-04-06/jobs-growth-is-no-excuse-to-kill-the-recovery.html

April 6 (Bloomberg) - Today’s disappointing jobs report highlights an important point about the state of the U.S. recovery: It’s not so strong that the country’s politicians couldn’t kill it off.

Almost three years after it hit bottom in mid-2009, the economy has recently been showing signs of entering a virtuous cycle in which rising employment, consumer spending and business activity reinforce one another. Even with March’s relatively meager 120,000-job increase in nonfarm payrolls, the three-month average gain comes to about 212,000. That’s more than enough to make a dent in the unemployment rate, which fell to 8.2 percent in March from 8.3 percent in February.

If the strengthening trend persists, the U.S., which accounts for about a fifth of the planet’s economic activity, could become an engine of growth just in time to help offset a slowing in the rest of the world. Economists expect the euro area to suffer a recession this year as austerity measures bite. China’s government has lowered its growth target as it seeks to engineer a soft landing.

Still, as the latest employment report demonstrates, the U.S. isn’t out of the woods. We’ve seen false dawns before, and the recovery remains weak. The job growth in March fell far short of expectations, and a decline in the number of people looking for work drove the drop in the unemployment rate. Forecasters surveyed by Bloomberg News expect the economy to grow at an inflation-adjusted rate of just 2.2 percent this year and 2.4 percent in 2013, below what most consider to be its long-term potential. Payroll employment, at about 133 million, remains about 5 million short of its peak in December 2007.

[xchrom]

1. Employment Increase in U.S. Trails Most-Pessimistic Forecasts

http://www.bloomberg.com/news/2012-04-07/employment-increase-in-u-s-trails-most-pessimistic-forecasts.html

Hiring by American employers trailed the most pessimistic forecasts in March, casting doubt on the strength of the expansion now in its third year.

The 120,000 increase in payrolls reported by the Labor Department in Washington yesterday was the smallest in five months. The data also showed the unemployment rate fell to 8.2 percent as people left the labor force, while workers put in fewer hours.

The figures, which followed an average 246,000 increase in payrolls in the previous three months, underscored Federal Reserve Chairman Ben S. Bernanke’s concern that stronger economic growth is required to keep powering the labor market. Yesterday’s report showed a drop in weekly earnings that bodes ill for consumer spending at a time when Americans are paying more at the filling station.

“Not welcome news,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The economy needs a lot of momentum to get through the latest headwind of the return of $4 gasoline, and this report is distinctly on the slow side.”

[sendero]

2. LOL

"That’s more than enough to make a dent in the unemployment rate, which fell to 8.2 percent in March from 8.3 percent in February. "

That one sentence tells you all you need to know about this article. It is a pack of bullshit.

120K jobs barely, if at all, covers the number of people entering the workforce for the first time. The UE rate dropped because there are many many more discouraged workers that have abandoned even looking for a job.

Some recovery.

[mathematic]

3. Not true

The total number of people that wanted a job, regardless of availability for work or search status declined last month. Did you even know the BLS tracked that number?

According to the actual numbers that were actually released yesterday by the actual BLS, the unemployment rate dropped due to a combination of fewer unemployed, a smaller labor force, and a ton of people leaving their employment and the labor force while not wanting a new job (e.g. retirement).

BLS Data

I understand how the discouraged worker narrative can be useful when the BLS numbers are getting worse but this isn't detective work or speculation... these numbers are collected by the BLS and anybody can look them up.

[jschurchin]

5. Gotta love it.

The total number of people that wanted a job, regardless of availability for work or search status declined last month.

From your link, the non-institutional population increased by 169,000 people and the number of people in the labor force fell by 164,000 people. Now your rational is that retirement is a portion of this decline in labor force, which I agree with by the way. My problem is with the total number leaving the workforce.

If you take the total number giving up looking, retiring, running out of benifits, etc. which from BLS is 164,000 and add to them the population increase, also from the BLS, of 169,000, you get a total of 333,000 people. Now if you go to the line in your link that says Not In Labor Force the increase from Feb. 2012 to Mar. 2012 is 333,000.

So according to the BLS, all of the population increase in the U.S. from Feb. to Mar. is not in the labor force. And this is normal, how?

[mathematic]

6. Finally! I found somebody willing to click on the link

Thanks for that, at least.

Population = labor force + not in the labor force. So whenever the labor force declines, all the population's increase is not in the labor force. Similarly, when not in the labor force declines, all the population's increase is in the labor force (like last month). It's important to note that these numbers are net of all changes. In neither of these cases are all the new people literally joining only one category.

While not typical, there's nothing inherently bad about the number of people leaving the labor force from employment exceeding the size of the population increase. Employed people retire, go back to school, stay home to take care of the kids, etc. all the time (unemployment benefit status plays no part in a person's classification as in the labor force). And the fact that the total number of people that wanted jobs, regardless of availability for work or job search status declined means that the people that left the labor force do not want jobs. People that don't want jobs not having jobs is a positive outcome, not a problem. Again, all this is in aggregate.

[sendero]

7. No matter how much you tortiure the numbers.

... the "unemployment situation" in this country did not get better last month, period.

[KG]

4. rec.

things still really, really suck out there.