The Unemployment Numbers Game

Isn't it interesting that as the November elections creep upon us, that the unemployment numbers seem to marginally improve. Today's unemployment rate is being reported to have dropped by a 10th of a percentage point to 8.1%.  This is fools gold however.  Only 115,000 new jobs were created in the month of April.  This number is outright pathetic.  It was such a bad number that stocks have reacted very negatively on the report.  As of this writing, the Dow Jones industrial average is down 115 points.  By any measure this is not good.

The only reason that unemployment has gone down is because the BLS cannot count those people who have stopped looking for work.  The labor force participation rate is what shows this.  The LFPR is simply the rate of people over 18 who are working, versus those who are not.  In the last 30 years we have seen the LFPR continually trend upward, mostly because more women are working, than prior to 30 years ago.  In the past several years, and particularly in the last three years, the LFPR has dropped significantly.  In fact the LFPR is currently at its lowest level since 1981.  Some of the LFPR are people who are retiring, but since women have been the cause of the LFPR trend moving upward, these numbers should really cancel each other out.  And if one looks at the trend on this graph, it is clear that the LFPR has dropped tremendously since 2008, when the economy really started to tank.

The big question that has not been asked is this.  Why, if we are in a recovery and jobs are being created, has the LFPR number not cratered.  Perhaps part of this is that baby boomers are beginning to retire. But one must, even with that pressure, wonder why the LFPR rate is STILL declining at the rate it is.  Some of those losses should be mitigated by people going back to work.

The other thing is the fact that net job creation during Obama's tenure is still at negative 1.6 million jobs.  When you put this all together, it seems that there is some major manipulation going on with regards to the unemployment rate.

In contrast to Obama's number of 1.6 million lost jobs under his watch.  Ronald Reagan, who inherited a horrible economy in recession, created more than 6 million jobs during his first four years in office.

There is no way around this one.  Obama's record on jobs is horrible.