What You Need to Know About April’s Jobs Numbers

[steve2470]

http://business.time.com/2012/05/04/what-you-need-to-know-about-aprils-jobs-numbers/

Any way you cut it, the Labor Department’s announcement that the U.S. economy added just 115,000 jobs in April is a disappointment. Economists had been expecting 160,000 new jobs, and even that number is far below the kind of growth our economy needs to get back to full strength in the near term. At the same time, the unemployment rate dropped from 8.2% to 8.1%. So what gives? As with any Employment Situation Report, there’s a lot of noise in the numbers. Here are the three things you need to know about April’s jobs report to make sense of it:


1) Labor Participation Rate: The thing to remember about the official unemployment rate is that the Labor Department first has to estimate who is actually in the labor force before they can determine what percentage of people are unemployed. Obviously, your retired grandfather or your college student son aren’t employed. But they aren’t really unemployed either. They’re officially not in the labor force. The thing is that this “labor participation rate,” or the percentage of working-age people who are considered to be in the workforce, has been declining steadily since the recession began.

There are a bunch of folks who are really concerned about this trend, and Republicans have been using this figure to bash the President and the economic recovery. After all, the more people in the labor force, the stronger the economy. And if people are merely dropping out of the workforce, that doesn’t really represent a recovery does it? At the same time, there are reasons to not be so concerned about this trend. The labor participation rate had been dropping even before the recession. Our country is getting older, and therefore naturally our labor participation rate will be lower. And as Matthew Yglesias of Slate points out, America still has one of the highest labor participation rates in the world — much higher than countries like Germany, which are though to have weathered the recession well.

2) Seasonal Adjustments: You don’t have to be an economist to know that we had a very warm winter in many parts of America. And oddly enough, that warm winter may have a lot to do with the strong numbers we saw from December through February, and the weaker numbers we’re seeing now. The thing to remember is that the economy usually adds many jobs during warm weather months and fewer jobs when it’s cold, and the labor department generally adjusts for these idiosyncrasies to make month-to-month comparisons coherent. However, many believe that this year warm winter pulled forward a lot jobs that would have been added this spring, causing seasonal adjustments to exaggerate the job numbers in the winter; by the same token, seasonal adjustments may be suppressing the more recent numbers. These factors balance out in the long run — see below — but because everyone is watching the trend lines, they’re arguably creating the illusion that the recovery is losing steam.

*more at link above*

[sharp_stick]

1. Yeah but that's complicated

It's so much easier to find a blurb on google news and argue with that.

[Romulox]

2. One problem: many so-called "discouraged" workers will re-enter the workforce if things improve

Their numbers will continue to be a drag on any major decrease in unemployment for the foreseeable future...

[FSogol]

3. Attn everyone. The good numbers you are seeing are bad for Obama.

Sheesh. Yesterday it was pot and today it is the numbers that are improving aren't really improving.

[Dawson Leery]

4. Upward revisions to the numbers have been constant for the past 2 years

3) Upward Revisions: Another positive to take out of the report is that the Labor Department upwardly revised the jobs added in March by 53,000, so this report really showed more jobs being added than the headline 115,000 number suggests. And these upward revisions remind us that this is just one month of data that could also be upwardly revised in future reports. For these reasons, it’s much better to look at longer-term trends in job growth. As Brad Plumer of The Washington Post points out, the four month trend right now is 201,000 jobs per month. That’s a healthy number, though not enough to get us out the unemployment hole quickly.

Read more: http://business.time.com/2012/05/04/what-you-need-to-know-about-aprils-jobs-numbers/#ixzz1tvkBc500

[maxrandb]

5. Agree that the numbers could have been better

but considering we were losing 750,000 jobs a month because of the Bush-Republican Depression (oh and those numbers also included a declining labor pool) I'll take this a relatively "good" news.

Makes you wonder what the recovery would look like had the Republicans not spent the past 3.5 years in a pitched Civil War against Public Sector employment.

A great ad would be; "Well, if you discount all the jobs lost in Wisconsin under Scott Walker, we'd be at 6 or 7 percent unemployment".