What do the unemployment numbers really mean?

Posted By on October 5, 2012

The unemployment numbers were released this Friday morning and looked 4 tenths better than August (7.8% from 8.2%) drawing suspicion from those who suspect a political conspiracy. Since the numbers are generated in questionable ways including phone polls, who knows?nonfarmpayroll121005

This is still good news for President Obama who will who will point to economic recovery due to his stewardship of the economy.

The payroll numbers are less encouraging from my point of view as a total of 114,000 jobs were created (104,000 in the private sector). Who really understands the numbers and how accurate our measuring methods are?

My casual observer view is that the unemployment numbers are lower because fewer people are losing their existing jobs and those long-term unemployed are slowly dropping off the list. What we do know is that they are not being rehired in any large numbers (chart above) and this is reinforced by the lowest number of Americans participating in the U.S. workforce in my working lifetime (link and graph below). So personally I would be careful in getting too excited about the numbers by just looking at the lower unemployment number (if it is even realistic), because it doesn’t reflect job growth and how most people see their personal finances if they are employed.

laborforce1983-2012

Comments

  • A Jack Welch op ed sums thing up after catching heat for a tweet:
    http://t.co/AbWcP8z2
    “The coming election is too important to be decided on a number. Especially when that number seems so wrong.”

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.