July Unemployment at Worst Level of Recession


I’m still catching up on things since returning from vacation, so this is a bit of old news, but news that I can’t let pass without comment – the July unemployment report (link provided above). 

According to the Bureau of Labor Statistics (BLS), unemployment fell in July to 9.1% from June’s level of 9.2% while the economy added 117,000 nonfarm jobs.  On the surface, it sounds OK.  Unemployment came down a little and we added some jobs, right? 

Not so fast.  While the “establishment survey” (the one the BLS uses to measure how many jobs were created) says we added jobs, the “household survey” (the one used to calculate the unemployment rate) paints an entirely different picture.  That survey once again used the “mysteriously vanishing labor force” trick to make it appear that unemployment dropped by a tenth of a percent.  According to the BLS, nearly 200,000 workers vanished from the labor force during July in spite of the fact that the U.S. population actually grew by that many people.  If we assume that a constant percentage of the population needs work to support themselves and their families (my “U3a” calculation), unemployment actually rose to the highest level since the start of the recession in late 2007 – 12.0%.  And the broader measure of unemployment, my “U6a” calculation, also rose to its worst level – 21.3%.  Here’s the data and the chart:

Unemployment Calculation     Unemployment Chart

Also, the “employment level” (the number of people working) fell for the fourth consecutive month, falling by 38,000.  So, not surprisingly, per capita employment also fell for the fourth consecutive month to the lowest level since the start of the recession.  Here’s the chart:

Per Capita Employment

By the way, lest someone think that I’m just manipulating the data to suit my own purpose, here’s a link to the BLS’s calculation and chart of the “labor force participation rate”:


As you can see, it has plummeted to its lowest level since the Great Depression. 

Finally, the number of unemployed workers also rose to the highest level since the start of this recession – just over 19 million workers.  Here’s the chart:

Unemployed Americans

All in all, a really ugly report, with the unemployment rate, per capita employment and the number of unemployed Americans all hitting their very worst levels of the recession.  Given that and what’s happened since the beginning of August to consumer and investor confidence, the swoon in the markets and the collapse in manufacturing, does anyone still believe we’re not already in a double-dip recession, or that things aren’t getting worse? 

So what’s the solution, you might ask (if you’re new to this site)?  Is it lower taxes and a more business-friendly regulatory environment?  Well, in spite of historically low tax rates and the most business-friendly regulatory environment ever, Bush left office with the economy in a state of free-fall.  Or is the solution more government spending and stimulus?  Both the Obama administration and the Federal Reserve have simultaneously taken that approach, but to no avail whatsoever.  None of these approaches are working because none address the root problem with our economy.    If you don’t know what that is, I suggest reading more on this site and that you read Five Short Blasts.

* * * * *

The breakdown of the 117,000 jobs that the establishment survey claims were created in July are broken down as follows.  By the way, if an establishment that has been included in the survey fails to respond, as would be the case if it goes out of business, what does the BLS do?  Do they count all of the jobs that were once in that establishment as lost, or do they simply add some other establishment to the survey?  I’m just speculating, but perhaps that accounts for the disparity between the establishment survey and the household survey.

  • Health care:  + 31,000
  • Retail trade:  + 26,000
  • Manufacturing:  + 24,000
  • Professional & techincal services:  + 18,000
  • Mining:  + 9,000
  • Construction:  unchanged
  • Transportation & warehousing:  unchanged
  • Information:  unchanged
  • Financial services:  unchanged
  • Leisure & hospitality:  unchanged
  • Government:  – 37,000

3 Responses to July Unemployment at Worst Level of Recession

  1. Robert says:

    I’m sure you’ve seen Obama’s latest policy change. Can the President actually do this? If so, I don’t believe this bodes well for the U.S.


    • Pete Murphy says:

      I heard about something about this yesterday. I’ll have more comment in the next couple of days, Robert. I’m on the road right now.

    • Pete Murphy says:

      Robert, I’ve now had a chance to read the FAIR statement and the White House press release. First of all, I agree with FAIR’s assessment of the situation. The president is abdicating his responsibility to enforce the laws of the U.S. In its press release, the White House commented that “it’s clearly impossible to deport 10 million people,” or something to that effect. Nonsense. Far greater numbers of legal immigrants leave the U.S. every year. Why is it impossible for a few million more illegal immigrants to leave?

      This was purely a political calculation. The president has made a decision to solidify support near-term (in the runup to the 2012 election) among his base by holding onto the few votes of those served by the interests of the illegals – mostly family members who are voting citizens in the U.S. He’s made a calculation that doing the right thing by the American people on the immigration issue won’t swing any Republican voters his way, nor will it swing enough independents to counteract the loss of the supporters of the illegals. Someone who would make such a calculation – to take action that harms the U.S. in order to garner a few votes – isn’t fit to lead this nation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: