On Friday the Bureau of Labor Statistics (BLS) released it’s “Employment Situation Summary” for the month of December. (Link provided above.) The headline was that 103,000 jobs were created in December, and unemployment plummeted to 9.4% from 9.8% a month earlier.
The plunge in unemployment fooled no one. Three quarters of that decline was due to another 317,000 workers mysteriously vanishing from the labor force – people counted as “no longer seeking employment.” Since the beginning of the recession in late ’07, the official “civilian labor force” has actually contracted by almost 100,000 workers at the same time that the population has grown by over 8 million people. That’s just not plausible. No one believes it, aside from the folks at the BLS and the president’s administration.
Employing a more accurate method of calculating unemployment, U3 unemployment actually fell by only 0.1%, from 12.0% in November to 11.9% in December. The broader measure, U6, which includes discouraged and marginally employed workers, fell to 21.0% from 21.3% a month earlier. Here’s the data and a chart of the various measures of unemployment:
To be fair, part of the decline in unemployment, about 0.1%, was due to a jump of over 300,000 in the employment level. That’s good news, but we need to see this happening consistently, on a month-by-month basis, before we conclude that the labor market is improving. This is only the third improvement in the employment level in the last eight months and the first improvement in the last three months.
Per capita employment remains very close to the lowest level since the recession began. Here’s the chart:
The number of unemployed Americans remains near its worst level, just shy of 19 million:
And here’s a chart of the labor force and employment level:
The 103,000 jobs added in December (which comes from the BLS’s “establishment survey”) break down as follows:
- Leisure and hospitality: + 47,000
- Health care: + 36,000
- Professional & business services (temp help): + 16,000
- Retail: + 12,000
- Manufacturing: + 10,000
- Mining: + 5,000
- Construction: – 16,000
The gain in manufacturing jobs is the first improvement in five months. Including that gain, manufacturing jobs have actually declined by 37,000 during that five-month period.
The December employment report, rather than offering hope of an improving jobs picture, merely reinforces the fact that the economy has settled into a “new normal” of 9-10% unemployment. What’s scary is that the economy has flat-lined at this level in spite of over $2 trillion in stimulus by the Fed and another $800 billion in government stimulus spending. And that doesn’t even include the $900 billion in stimulus provided by extension of the Bush tax cuts. All of this stimulus has to end soon. Something has to give, and soon.