As is often the case, the good news from the establishment survey portion of the jobs report, released by the Bureau of Labor Statistics (BLS) on Friday, grabbed the headlines. Nonfarm payroll employment rose by 163,000 – significantly more than the low expectations of most economists. The stock market was ready for some good news. The uptick in unemployment, to 8.3% from 8.2% a month earlier, was shrugged off. And no one took any note of the really bad news from the household survey that caused it. In July, the employment level fell by nearly 200,000 jobs – the biggest decline in over a year. And were it not for the fact that the government once again claimed that 150,000 workers had mysteriously vanished from the labor force (when, in fact, the labor force actually grows by over 100,000 workers per month), the unemployment rate would have jumped to 8.4%. Here’s a spreadsheet that contains the figures, as well as the calculations of the unemployment rate, both real (my calculation) and trumped up (the government’s calculations): Unemployment Calculation. And here’s a chart of those unemployment rates: Unemployment Chart.
The number of unemployed Americans rose to 17.315 million, the highest level in four months. Here’s a chart: Unemployed Americans. And per capita employment actually fell for the first time in three months, nearly wiping out the gains of the prior two months. Here’s the chart: Per Capita Employment.
All of this is just further verification that the U.S. economy is now firmly stuck in a “new normal” of 8%-or-greater unemployment. Take away the unsustainable rate of deficit spending of $1 trillion per year (as may very well happen early next year) and things will get much worse. Businesses are already cutting back in anticipation of this, as reflected in the manufacturing reports during July. All of this spells bad news for President Obama’s chances for re-election.