Two articles in the New York Post provided some perspective to the recent unemployment figures published by the U.S. Department of Labor on Friday.
An editorial offered a number of stark facts. By way of background, the Labor Department announced that the economy produced 80,000 new jobs resulting in an average of 75,000 per month in the second quarter of 2012, or one-third the first quarter pace. The unemployment rate held steady at 8.2%, “the longest streak at 8% or above since the Great Depression.” Interestingly, the Social Security Administration indicated that the number of workers who went on federal disability exceeded job growth.
The president said not to worry in describing the results as “a step in the right direction.” I don’t think so. In 2009, Obama predicted that the stimulus package would bring unemployment down to 5.6% by this time. The administration has been telling Americans not to put too much weight on these statistics ever since that time.
Other facts in the editorial indicated that the “broader unemployment rate, which includes people who are not seeking employment or working part time, is 14.9 percent. The unemployment rate for minorities is much higher than the national average; it is 14.4 percent for African-Americans. The number of long-term unemployed is 5.4 million, which accounts for 42 percent of the 13 million unemployed in the country. Unemployed women totaled 780,000 more than when Obama took office.
A second New York Post article provided clarity about how the unemployment rate can change and is calculated. It stated that the Federal Reserve has historically been able to impact unemployment by lowering rates. The rate cannot be decreased any further emasculating the Fed influence over the economy.
The unemployment rate will worsen as we approach the elections. The culprits that will cause this dilemma for the current administration are seasonal adjustments. Currently, adjustments are working against decreased job growth as the unadjusted number in July was 391,000, as compared to the aforementioned 80,000 that was reported. These figures are available in Table B-1 of the Labor Department report. The number of jobs increased from 133.725 million in May to 134,116 million in June, yet the Labor Department reported a much smaller “adjusted” figure.
Adjustments for the seasons attempt “to smooth out statistics so they account for things that are expected to happen each year.” In June, the adjustment worked against the administration. But, it worked for it earlier in the year. The adjustments for the balance of the year could be very bad for the president if, for instance, “excessively hot weather . . . causes employers to [not create] new jobs . . .” The president has said it, “It’s still tough out there,” and he is correct.