Unemployed Americans Drop out of Labor Pool

[swag]

For some balance and perspective on the March jobs number that all are foaming about:

http://www.magicvalley.com/news/business/index.asp?StoryID=4820

Excerpt:

The share of the U.S. population working or actively seeking a job has fallen to 65.9 percent, the lowest level in 16 years. Economists say the weak jobs market is causing people to give up their searches and drop out of the labor pool at an unusual pace -- holding down the unemployment rate, which was 5.6 percent in February.

. .

"Normally in a recovery the participation rate would rise," said Sung Won Sohn, Wells Fargo's chief economist. "People hear about the improving economy and more job opportunities so they actually come out of the woodwork. We are seeing the opposite of what's been normal in the past. That's why the jobless rate has really become somewhat of a misleading indicator."

People not actively seeking work when the department conducts its survey of households are not counted as unemployed. Those people say they have stopped looking because of frustration or personal responsibilities, such as deciding to attend school.

. . .

If those people who want jobs but aren't looking were counted, the unemployment rate would be more than 7 percent, said Mark Zandi, chief economist at Economy.com.

"To me, that is much more representative of the state of the job market," he said. "It doesn't feel like a 5.6 percent job market. It feels like more of a 7 or a 7 1/2 percent job market."

. . .

[swag]

1. What this implies to me is a rising unemployment rate

over the next few months.

The March blip will bring more discouraged workers "out of the woodwork" as the article says, just in time to join the new college grads in the workforce. We may see an unemployment rate of 6% in June, right at that crucial 5-month pre-election mark (see the backtesting - if unemployment peaks 5 months before an election, this is very bad news for the incumbent) that would be very bad for Bush.

The March job creation blip does not reflect the reality of the job market, rather it hinges on seasonal and one-time (grocery strike) factors that will not likely repeat.

Recall the employment component of yesterday's manufacturing index was in contractionary mode.

[coloradodem2005]

4. It's already up to 5.7% again.

[Catfight]

2. Can you explain the current NYTimes newest lie of 308k jobs created?

308,000 Jobs Created; Growth Beats Expectations

How can this headline be true?

[swag]

3. 308,000 jobs can be true for March,

as explained in the excellent threads in LBN, because of pent-up demand from the previous months of dismal job creation, because of the resolution of the grocery workers' strike (50k jobs?), and because of seasonal factors leading to the hiring of construction workers, particularly in the NE US.