The Real Jobs Report: August 2013
According to the BLS, there were +169,000 non-farm jobs created in August and the unemployment rate continued its downward trend to +7.3%.
Better yet, U-6 total unemployment that includes marginally attached and part-time for economic reasons dropped from 14% to 13.7% last month.
With unemployment falling like that, why isn’t everyone happy as a camel on Wednesday?
A Peek Under the Jobs Report Hood
As always, the previous two months employment figures are adjusted.
The first thing to notice about that is July’s job creation total was revised down from +162K to a pathetic +104K. It’s the worst month since June 2012. It also basically inflates the current month’s job creation figure that would otherwise only be +111,000 for the entire month of August. That’s bad!
June’s job creation figure was also revised down by -16,000 jobs. That’s bad to.
How can -74,000 jobs we thought were created in the previous two months be taken off the rolls, yet unemployment still drops?
That does not compute! Mr. Spock would say, “Your statement is not only illogical but also unworthy of refutation”. (“Star Trek: That Which Survives” – 1/24/1969)
Why did unemployment drop?
Mr. Spock never had to deal with the U.S. federal government. In this century, if you drop out of the workforce or never enter it in the first place you don’t get counted as unemployed.
The Labor Force Participation Rate in August dropped another 0.2% from 63.4% to 63.2%. It has been falling steadily since 2008. Translated into real people, that is -114,000 evaporated from a total workforce of +155 million in August.
The real civilian labor force itself dropped by -115,000. That created +115K actual suffering Americans last month.
The Employment-Population Ratio, which had been inching upward, backslid from 58.7% to 58.6%. Doesn’t sound like much, but it works out to -126,000 more dropouts while the civilian population of 16 and older grew by +203,000.
These figures come from the population survey that has a higher error level than the employer survey. That means the numbers might not be as bad as they look.
However, it emphatically means that 7.3% unemployment, that also comes from the population survey, looks much better than things really are.
We could go on and dig deeper but, quite frankly, it’s depressing.
If you want to live in Candyland just read Alan Krueger’s monthly jobs assessment. He is President Obama’s Chairman of the Council of Economic Advisers.
Oh… wait… you can’t!
A few days ago Alan Krueger and Gene Sperling, President Obama’s Director of the National Economic Council, both stepped down from their posts. No reasons given.
Perhaps Kreuger just got tired of repeating “the U.S. economy is continuing to recover from the worst downturn since the Great Depression” month after month after year after year in his own monthly jobs report.
Given the jobs numbers, it may be a safe bet that Bernanke and the FOMC won’t start tapering QE in September.
The BLS will have to add +2 of the President’s men to the rolls of the unemployed.