NYT: "Which of the two numbers should you believe? The short answer is the job-growth number."

[Pirate Smile]

Correcting the Picture on Jobs

By DAVID LEONHARDT

This is one of those months when it’s impossible to tell a consistent story about the jobs report.
Job growth was unexpectedly strong last month. The unemployment rate rose to 9 percent, from 8.8 percent, its biggest one-month increase in more than a year-and-a-half.

Which of the two numbers should you believe? The short answer is the job-growth number. The labor market appears to be improving. The rise in the unemployment rate is mostly a reflection of the fact that the rate fell by an artificially large amount over the previous several months.

It doesn’t actually mean unemployment rose last month. Instead, it reflects a kind of statistical catch-up. The old picture of the job market, as presented by the household survey, had been too optimistic. (Did anyone really believe that the job market recently improved at its most rapid two-month pace since the 1950s, as the unemployment rate suggested?) Today’s report helps correct the picture. This is simply the nature of surveys: they have noise in them.

-snip-
The job market continues to improve, which is certainly welcome news. But the pace of improvement remains modest. Unfortunately, that’s the typical pattern in the wake of a financial crisis.

http://economix.blogs.nytimes.com/2011/05/06/correcting-the-picture-on-jobs/

[Divernan]

1. But the correct answer is the unemployment rate, if correctly calculated,

according to the New York Times - at nearly 16%.

http://smirkingchimp.com/thread/mike-whitney/35981/party-like-its-1929

"When lauding the economy, Mr. Bernanke and many other economists and politicians point out, correctly, that the unemployment rate has declined from a recession high of 10.1 percent in late 2009 to 8.8 percent now. That would be encouraging news if it indicated robust hiring for good jobs. It does not.

Over the last year, the number of new hires has been outstripped by the masses who have either given up looking for work or who have not undertaken a consistent job search, say, after graduating from high school or college. Those missing millions are not counted in the official jobless rate; if they were, unemployment today would be 9.8 percent. The rate would be 15.7 percent if it included those who took part-time jobs in lieu of full-time ones." ("The Economy Slows" New York Times)

So, even the New York Times agrees that unemployment would be nearly 16 percent if the figures were correctly calculated. Those are Depression numbers. 14 million people are out of work and record numbers of people are on food stamps (44 million)

Wednesday's down-market sent commodities plunging as signs of emerging deflation pushed investors into Treasuries. Gold and silver fell sharply. Troubles in Japan, China and the eurozone have intensified fears of a global slowdown and perhaps another bout of recession. The dollar strengthened for the third straight session, in spite of the Fed's zero rates and $600 billion bond buying program. Trillions of dollars in monetary and fiscal stimulus have jolted stocks back to life, but debt-deflation dynamics in the broader economy are as strong as ever. Unemployment remains stubbornly high, consumer retrenchment has reduced discretionary spending, and housing continues its inexorable nosedive. The stock market continues to inch higher buoyed by central bank liquidity and margin debt, but investors are increasingly skittish and searching for direction.

[stevenleser]

4. That is misleading in its own way. You have to be consistent.

Your figure would be meaningful only if you went back to a time of good employment and used the same methodology to determine the unemploment rate at that time and compare THAT figure to the one you are offering for today.

[Beacool]

6. The problem is that people have been consistently unemployed for the last 3 years.

Everyone can sugarcoated any which way, but the reality is that millions of people continue to be unemployed or underemployed. The pain is real and felt everywhere in the country. Right now 1 out of 7 people are on food stamps. There are more people at or below the poverty line that there have been in decades.

Do politicians care or do they only care inasmuch as it can endanger their chances of getting reelected?

:(

[stevenleser]

7. My point stands. Trying to shock people with a 16%+ unemployment rate figure is misleading

People will compare that in their minds with a recent period of low unemployment, like in the late 1990s and say, "Wow, 4% vs 16% is a huge change!"

Well, in reality, it wasn't 4% back then either if you use the same methodology that yields 16%-20% now.

[mikekohr]

2. Kick

[girl gone mad]

3. You guys should be consistent.

When job creation is weak, but the unemployment rate falls, you want everyone to pay attention to unemployment. Now that unemployment is rising, you want us to focus on the jobs number.

[Lucky Luciano]

5. Most people I know always focus on the absolute jobs creation number.

The "rate" is soooooo secondary.