The media is ballyhooing the October employment report as evidence of strong job growth and a strong labor market. Don’t be fooled.
Sure, the headline numbers look good. According to the establishment survey, the private sector added 142,000 jobs and unemployment fell to 4.9% (from 5.0% in September). That’s good. However, in the new normal where 100,000 is the new zero, it’s not great.
But look deeper. The employment level – the number of people employed according to the household survey – actually fell by 43,000 in October. The drop in unemployment? That’s only due to a supposed decline of 195,000 workers in the labor force – the old “vanishing labor force” trick that the Obama administration has used often to mask the reality of a weak labor market. In fact, with the population growing by 224,000 in October, the labor force grew by over 100,000. Without that trick, unemployment actually rose by a tenth of a percent in October, and an honest measure of unemployment – one that grows the labor force along with the growth in population – has unemployment at 7.9%.
Regarding the employment level, it’s also worth noting that since February it has risen by 851,000. That’s an average increase of 106,000 per month – barely keeping pace with growth in the population. Consequently, there’s been no improvement in the historically high rate of 7.9% unemployment (the rate it would be if the labor force grew in proportion to the population).
It’s also worth noting that per capita employment – the employment level divided by the population – is exactly where it was in February. No improvement.
October’s employment report is one more piece of evidence that the economy continues to stagger along in a zombie-like state.
Next up: the September report on the trade deficit, also released this morning.