After receiving media adulation the past few months as the best job growth since the 1990’s, the Obama Boom returns to form. Job growth for March fell to 120,000 created. This is below the 150,000 needed to keep up with population growth. The unemployment rate dropped to 8.2%. This fall was due to workers leaving the labor force and not job growth. This report was below the 200,000 estimate the media was expecting.
U.S. payrolls rose far less than expected in March, keeping the door open for further monetary policy support from the Federal Reserve, even as the unemployment rate fell to a three-year low of 8.2 percent.
Employers added 120,000 jobs last month, the Labor Department said on Friday, the smallest increase since October.
The weak employment growth last month likely reflected the fading boost from unseasonably warm winter weather. The payrolls count for January and February was revised to show just 4,000 more jobs created than previously reported.
The drop in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labor force. The separate household survey, from which the jobless rate is derieved also showed a drop in employment.
This was a bad jobs report no matter how its spin. The Pharaoh in Chief with the assistance of his high priests (media) will claim times are good and these are good numbers. Hopefully Americans will not believe the lies. But seeing the hold the Pharaoh has in people, I will not count on it. The Obama Boom is a myth that refuses to die.
Update: Dorian Grey linked to a great article showing why the 8.2% rate is a bogus number. The real number should be 9.4% is people were not vdropped from the rolls.
Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment. According to their model—as displayed in the above chart, updated—unemployment should be around 5.8% today.
But the true measure of U.S. unemployment is far worse:
1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today down from last month—the U-3 unemployment rate would be 10.9%.
2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.5%.
3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.4%.
4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.5%.
5. The employment-population ratio dipped to 58.5% vs. 61% in December 2008. An historically low level of the U.S. population is actually working.
The media can spin all they want, but the unemployment situation sucks.
(Hat Tip: Doriangrey)