Real GDP in 2007QII was only 1.9 percent higher than it was as of 2006QII. So what does this mean to the labor market? The latest from BLS has come out:
Nonfarm payroll employment was essentially unchanged (-4,000) in August, and the unemployment rate remained at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the last 3 months, total payroll employment changes have averaged 44,000 per month and private sector employment changes have averaged 72,000 per month (as revised). In August, employment in manufacturing, construction, and local government education declined, while job growth continued in health care and food services.
Translation – this drop in employment continues this recent trend in weak employment growth. But that’s the payroll survey and isn’t the fact that the unemployment rate remains at 4.6% great? Well, the BLS explains why this standard rightwing canard is full of it:
In August, the civilian labor force edged down to 152.9 million, and the labor force participation rate decreased to 65.8 percent. The declines were largely due to a drop in labor force participation among teenagers; their participation rate fell to 39.7 percent. Total employment (145.8 million) and the employment-population ratio (62.8 percent) were little changed over the month.
We have noted before that the employment to population ratio, which was 63.4% as of December 2006, has declined over the course of this year dropping to 63% as of July 2007. Now we see that this ratio has dropped to 62.8%. It would seem that the steady unemployment rate is due to the fact that the labor force participation rate has declined as well – from 66.4% as of December to 65.8% as of August.
So is there is silver lining? Maybe this will encourage the FED to lower interest rates.
Update: CNN just had Ali Velshi on to explain to us what the employment report really means. He starts off saying he was surprised that employment actually fell. And then he touted the unemployment rate as being evidence that the labor market is really not that bad. Can this man be more stupid? So what are his qualifications to report on economic news? This source claims:
Ali Velshi earned a degree in religion from Queen’s University
And CNN thinks Velshi is their best person to report on economics? Figures from the organization that puts Sanjay Gupta up as an expert on health economics.