ok I haven't posted here in a long time, hopefully a couple of my friends are still around. Hopefully most of the whack job libs I knew have put their head in an oven by now.
But someone please explain this:
Economists predicted a total of 113k jobs added (they nailed it 114k) and with that the unemployment growth would be at around 8.2% but it dipped to 7.8%? Does anyone know the math on how they got to that number because I dont get it. It was always said you need to have 150k jobs added for slight growth and with only 114k jobs we got the biggest unemployment rate drop in almost 30 years??? Someone please explain
There are a lot of reasons. The 7.8% figure recently released is called the U3. It only counts people who are actively looking for work and can't find it. When people give up looking they are no longer counted in those figures. So that's one reason why it "dropped". When you have a flood of people that say "
screw it, I give up. I won't even bother looking anymore." the numerator decreases and hence the unemployment rate drops. However,
it's an artificial drop. It doesn't mean that more people have found work, it means that fewer people meet the definition of U3 unemployed.
Also the unemployment rates are seasonally adjusted. What that means is that the rates are weighted according to historical trends in an effort to weed out rises and drops that are more a result of the time of year than the status of the economy. Hiring temporary workers for the holiday season for example. They expect a rise in employment so they factor that rise into the final numbers. In September they expect a decrease primarily because young workers are going back to school and quitting their jobs. So to keep everyone from going into a frenzy with a massive U3 drop they adjust the numbers to account for student workers quitting their summer jobs.
Only this year...they didn't. Younger workers kept their jobs but the seasonal adjustment which was anticipating them all quitting was kept in the equation. The result is the
appearance of an unemployment drop due to a trend that was expected and didn't happen.
Also the U3 is based in large part on polling done of households. This seems to be a shock to everyone in the media but I have been making this point for years. They essentially blind call phone numbers and ask a series of questions that determine the employment status of the household. Like any poll it's subject to the freak occasion where they just happen to reach a sample that does not accurately reflect the status of the public at large. Those are called
outliers. The unemployment rate is subject to the occasional outlier just like any other poll.
So my guess is that what happened was a combination of the three above effects with the main emphasis being on points one and especially point two.
In order to maintain population growth roughly 120,000 - 140,000 (depending on who you ask) people must find work in any given month just for the unemployment rate to remain even. Anything less than that and it's going backwards. So 114,000 new jobs according to payroll information means that last month we went backwards. The argument that in order for the U3 to drop 0.3% it would require over 800,000 new jobs is absolutely correct. No one with two brain cells is going to make the argument that last month, after years of monthly job creation right around 115,000, that
suddenly 800,000 people found new jobs. Bullshit. That's right up there with "
the attack on our embassy was a spontaneous event". What it really means is that 800,000 student workers who they
thought were going to quit their jobs
didn't, and they are being counted as "
new workers" even though they are not.
A more accurate way to look at unemployment is the U6 (which takes disgruntled workers and part-time workers into account) and the Labor Force Participation Rate, neither of which have budged.
