Today’s FYI: Unemployment is below 8%. Now what?

According to this morning’s new jobs data for September, the U.S. unemployment rate has dropped to below 8% for the first time in close to 4 years. When you parse the report out, you can see some pluses and some minuses. The bad news first:

  • We are still seeing very slow growth, with 114,000 jobs added, which falls below the expected number of 118,000 jobs.
  • We lost jobs in the manufacturing sector (16,000 jobs lost in September).
  • The number of part-time workers has increased (8.0 million in August, to 8.6 million in September).

And now the good news:

  • Unlike what we have seen in some previous months, the lower unemployment rate this time is primarily due to jobs added, and NOT due to people dropping out of the search for jobs. The labor-force participation rate, which indicates how many people are actively looking for work, was “relatively unchanged”, according to the report by the Bureau of Labor Statistics.
  • The numbers for July and August have been revised upward, indicating a gain of 86,000 additional new jobs above what had originally been reported for those 2 months.
  • Government jobs have been lagging behind private-sector jobs, with more layoffs than hires for the most part. This month, some of these government jobs have returned.
  • Helloooooo! It’s below 8%!

This is certainly a mixed bag when you look at it in detail, but it answers the overall question of whether job growth is headed in the right direction with an unqualified “yes”. The progress is slow, and some industries are doing better than others – certainly we’d like to see that manufacturing number go up ASAP – but there is now a net gain in jobs under the Obama presidency, as much as it pains Republicans to hear that fact.

The political question this now raises is, how will this information factor into the race for the White House? Well, certainly we will expect this news to bolster President Obama after a badly-received debate performance, and it gives him some fresh ammunition to bring to the next debate. We can also expect the GOP to spin this report as negatively as possible – for them, bad news is good news, and there’s no good news that they can’t turn bad if they work it hard enough. This report, while encouraging, is not the resounding triumph that some folks would like to see. It will not move the needle for those who are already leaning one way or the other in this election. If you have a fundamental problem with Obama, you’re not going to let something as trivial as facts interfere with your vote for Romney. But there are still some on-the-fence voters out there – people who were waiting to see something concrete in these last couple of months which would point them toward one candidate or another. This news might well be the information that convinces some of these voters to give the president another 4 years. When things are moving in a better direction, and progress is fragile, the last thing any rational person should want to do is press the reset button and bring in a guy whose policies will take us back to an economic Ground Zero. Hopefully there are enough of these rational folks among the remaining undecided voters. In a race this close, every vote will be important. This jobs report isn’t going to impress everybody, but it might lock up a few more votes of confidence for Obama, and every little bit helps.

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20 thoughts on “Today’s FYI: Unemployment is below 8%. Now what?

  1. It sure will be interesting to see how the Mittster spins this one.

    His lies actually fascinate me; of course they also anger me.

    • Oh, Mitt and his minions will find SOME nugget of despair in this whole thing, don’t you worry about that. His lies do more than anger me – they scare me to death, because so many people buy into them without knowing any better.

  2. You know they will find a way to negatively spin this – I’ve already seen Jack Welch tweet that the numbers are fixed! But the truth is that Mitt’s talking point has been “Unemployment is over 8% and that means Obama failed.” Well, its under 8% now. Let’s see what lies they spin to cover this one.

    • Exactly. Republicans cheer for higher unemployment and panic when unemployment goes down…and there are STILL people voting Republican…GET A CLUE, y’all!

    • I’ll say this for the GOP – at least they’re relatively predictable. They just can’t stop themselves from engaging in that sort of pointless, baseless, reactionary, knee-jerk behavior, en masse. Reminds me of Emerson’s quote: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

  3. 7.8 % unemployment is nothing to be proud of . What about all of the people no longer counted ? Why don’t you care about them ?

    • Where in my post, or in ANY post on this blog, have you seen me say that I don’t care about those who are still unemployed? And where in this post did you see me say that a 7.8% unemployment rate is just AWESOME? I called the new jobs report a mixed bag, with positive indicators and negative indicators, and that’s exactly what it is. I am a realist, and as a realist, I see no reason to ignore the positive and only focus on the negative. But because that has been the tendency of many of the pundits on the right, it makes me wonder why the fact that we are no longer bleeding hundreds of thousands of jobs every month, as we were in January of 2009, is being treated as a bad thing. It has definitively gotten better, and it must get better still, but to discount the progress we’ve seen so far is just partisan political posturing.

      • Well stated, Chris, and pure facts — as you have a habit of using.

        Alan Scott sounds like a habitual ‘KoolAid’ drinker.

  4. Ted ,

    You might just want to double check what is in your glass . I drink beer .

    Chris ,

    Thank you for your reply . Asking me where you said you do not care about the still unemployed is far worse than what Democrats did with Governor Romney’s 47 % remark . He was speaking about the people who were not worth campaigning to, because President Obama had their votes locked up . Liberals morphed that into a false narrative, but hey politics is a contact sport and if Romney can’t take a minor hit like that he is not ready to be President .

    Sorry for going off on a tangent . You made the point that a drop to 7.8 % unemployment is a political positive for the President because Romney and his cohorts have made the 8 % number a political benchmark . I agree with you on that point, but economically it is a false marker . Governor Romney just said that if you actually counted the people who have dropped out of the labor force who were in it when President Obama was sworn in that number is 11 % . This has to do with something called the Labor Participation Rate and it is the lowest since 1981 .

    I remind you that Democrats hammered President Bush in 2004 because the unemployment rate had soared to 5.4 % . Funny how President Obama has lowered the bar so far that 7.8 % looks fantastic .

    • Alan, I am familiar with the labor participation rate. In fact I mentioned it in my post, and I pointed out that the new jobs numbers show this rate to be “relatively unchanged” since last month, according to the BLS summary of the data. There’s a link above to a .pdf of the report, and I took the info in my post directly from that report. This indicates that the change in unemployment numbers this month was affected less by people dropping out of the search for work, and more by the addition of new jobs. Also, In terms of this rate, most economists consider its downward trend to be something that began well before Obama took office. I don’t usually do the “cut-and-paste” thing in my blog, since I like to use my own words for the most part. But there was an article in the Washington Post which addresses this very claim by Mr. Romney regarding the “11%” unemployment figure, and it is pretty clear so I will just let it do the talking for me:

      “On the surface, Romney’s point seems reasonable. The labor force participation rate in January 2009 was 65.7, according to Bureau of Labor Statistics data. Had the rate remained the same, the labor force would be about 160,158,000. At the current employment level, the unemployment rate would be 10.7 percent.

      But this assumes all things are equal in the labor force, when in fact it is constantly churning and evolving. In particular, besides the aftermath of the Great Recession, the composition of the labor force has been affected by the retirement of the leading edge of the Baby Boom generation.

      A number of economists are arguing that the recession is distracting people from the real story — long-run demographic trends that have nothing to do with the current economy. Baby boomers are starting to retire en masse, which means that there are fewer eligible American workers.

      Demographics have always played a big role in the rise and fall of the labor force. Between 1960 and 2000, the labor force in the United States surged from 59 percent to a peak of 67.3 percent. That was largely due to the fact that more women were entering the labor force while improvements in health and information technology allowed Americans to work more years.

      But since 2000, the labor force rate has been steadily declining as the baby-boom generation has been retiring. Because of this, the Federal Reserve Bank of Chicago expects the labor force participation rate to be lower in 2020 than it is today, regardless of how well the economy does.

      In a March report titled “Dispelling an Urban Legend,” Dean Maki, an economist at Barclays Capital, found that demographics accounted for a majority of the drop in the participation rate since 2002.

      And what about the most recent downturn? Based on survey data, Maki found that about 35 percent of Americans who have dropped out of the labor force since the recession began in 2007 do want a job, but they have become too discouraged to fire off résumés. That’s a sign of a weak labor market. But the other 65 percent are people who have left the labor force and do not want a job. The biggest chunk of that group seems to be composed of baby boomers, those 55 and older, who have decided to retire early.

      That suggests, Maki and his colleagues wrote, that unemployment will not necessarily start ticking up again as the economy keeps adding jobs, as many people expect.

      “Such an event has not happened in the past and we do not believe it will this time either,” they argued.”

      So, as I see it, Alan, in coming up with his claim that the “real” unemployment rate is 11%, Romney is coming up with an extrapolation of the new unemployment numbers which assumes this rate is completely based on how well or how poorly the jobs market and the economy are, when in fact there’s more to it than that.This is why I can’t agree with your opinion that “President Obama has lowered the bar so far that 7.8% looks fantastic”. The bar was lowered before Obama was even sworn in. If you want to compare with his predecessor, then let’s consider the fact that Clinton left office when unemployment was at 4.2%. When George Bush left, it was at 7.8%, meaning there was a net increase of 3.6% in the unemployment rate over the Bush presidency. From the start of Obama’s term to date, there has been no such net increase in that number. Instead of month after month of substantial losses, we are seeing month after month of incremental stability and growth. So we had one guy (Bush) who saw hundreds of thousands of jobs being lost per month under severe recession conditions, and we had one guy who stopped those losses and steered us back to a much better place, all while contending with the same severe recession conditions Bush had. You don’t have to like Obama, that’s fine with me. But please try to understand that those of us who support him are not doing it because of “Kool-Aid” (especially not my good friend Ted – he knows his stuff, trust me). We are looking at facts and we are seeing improvement, and the improvement is there for you to see too, if you could allow yourself to do so over your personal feelings about Obama.

      • Thanks for the vote of confidence, Chris. I’d like to suggest, just to round out the matter of jobs loss, something that no oneseems to wants to talk about. A thing that definitely drives up corporation profits and drives down employment. An article in Salon, “Robots are coming (for your job)” explained it well. I posted it to one of my blogs on September 26th.

  5. Chris ,

    You cite your numbers and I will cite mine . In any Presidency you can have a major downturn . It happened at the end of Bush’s term so you guys get to claim Bush caused the meltdown . Okay play that game . I believe you have to look at an entire term if you want to compare .

    I calculated the average monthly unemployment rate under George Bush’s eight years . It was quite a long time ago, but if memory serves me it was about 5.6 % . I used to calculate President Obama’s . I have not done it lately . I am sure that even with this fantastic 7.8 % the nearly four year average is still a little worse than Bush .

    I do like your demographic analysis of the American economy, but I see it differently . If so many baby boomers were not retiring now the unemployment numbers would be even worse . I have been predicting a labor shortage in America for some time because of those demographics . That it has been put off indefinitely is a statement of how bad things still are .

    My personal feelings toward President Obama are based on my opposition to the course he has put my country on . I am younger than your friend Ted . I have another 10 years before I retire and it will not be in Florida . I know a little stuff too. My retirement will not be as comfortable Ted’s. And God help the poor souls behind me on that ladder . I am mad because President Obama has done nothing to fix SS and Medicare . He sure can demagogue it .

    To get back to facts . Yes you are right, there is great improvement . We are finally back to where we were four years ago with unemployment . Congratulations .

  6. Alan, you said: “I calculated the average monthly unemployment rate under George Bush’s eight years . It was quite a long time ago, but if memory serves me it was about 5.6 % . I used to calculate President Obama’s . I have not done it lately . I am sure that even with this fantastic 7.8 % the nearly four year average is still a little worse than Bush .” Two important facts to take into consideration here. Number one, although you can calculate a four-year average for either Bush or Obama, the trend is what matters most. Bush did have good years and bad years, but when you look at the direction the numbers took overall, there was a net-negative result in the unemployment rate by the time he left. Bush ended up in the hole compared to where he began. Obama STARTED in the hole on day one, and he has been moving in the opposite direction. So averages aren’t as important as the overall up/down trend over the course of each president’s term.

    And, the number two point is that the reason Bush ended up in the hole has an awful lot to do with his own policies and decisions. He was not entirely responsible for the downturn our economy took, but most economists agree that the decision to launch 2 wars, without paying for them, really set this country’s economy on a downward spiral. He was the first president in US history who chose not to raise taxes during wartime. That in itself was considered reckless but then he went one step further and cut taxes – TWICE. Instead of asking the American people to pay for the military that was serving them, he sold our debt to China to get those wars off the ground. And the economic problems we have had can be traced back, in large part, to these decisions. When Obama came into office, he was dealing with the aftermath of those decisions, and there’s a big difference between being the person who MADE the mess, and being the person who has to CLEAN UP the mess. Any mom will tell you that cleaning up takes longer than messing up, and that’s just the reality.

    Honestly, I think McCain would have had trouble righting our economic ship in 3-4 years, too. I think ANYBODY would have. Whoever came into office after Bush was sort of a political sacrificial lamb, because they were going to have to take heat for not fixing everything during their first term, even though the reality is they would not have been able to do it, whoever they were. So before you dismiss the progress that has been made in the past few years, you need to take all that into consideration. It was a tough road to get things back up to where they are now, and even though they’re not where we’d like them to be yet, it is just stubbornness to act as if what we’ve seen over the past 4 years has been anything other than movement in a better direction.

    And this is really at the heart of why I am not voting for Romney. I have no desire to elect someone who has very similar ideas to the policies that got us into this recession in the first place. In some ways, his policies are even worse, especially where jobs are concerned. I couldn’t believe it when I read that he is proposing to completely eliminate the taxes that companies pay on their foreign profits. That is rewarding and encouraging companies who hire and invest overseas, which I would think is the exact OPPOSITE of what we should be doing if we want to increase job growth here at home. The policies of across-the-board tax breaks for corporations have never encouraged businesses to reinvest their savings in creating American jobs. They just haven’t. The only way companies might do that is if they had a financial incentive for doing so, and that is what Obama has proposed. He wants to offer tax breaks for companies when they create jobs or invest in the US. And if they don’t meet those criteria then they don’t get the break. That makes so much more sense to me than Romney’s plan. It’s like the way they try to make everybody happy in kid’s sports competitions now. Why give everybody a ribbon just for showing up at the game? Why not give ribbons to the players that achieve something? Because if EVERYBODY gets a ribbon anyway, then why should anyone even bother trying to do a good job of accomplishing what they’re supposed to be accomplishing? Where’s the incentive?

    You also said, “If so many baby boomers were not retiring now the unemployment numbers would be even worse.” Well, that really isn’t relevant. The trend began 8 years before Obama was sworn in. The president before him had unemployment numbers that were affected by this same trend, and according to the projections of those who have studied this trend, the next 2 presidents will have to deal with it too.

    As for Social Security and Medicare, I am also concerned about my retirement. I am a ways away from it at this point and I am no less worried about it than you are. Social Security hasn’t been addressed effectively yet by ANY president in my lifetime, and I can’t honestly say that I expect it to be an issue that gets resolved as long as Congress remains as unwilling to work together as they have been. It’s just too big of an overhaul and it will require a lot more bipartisan effort than we’ve seen in recent years in Washington. But Medicare has already improved under Obama, because he reduced $716 billion in payments to providers who have been overcharging for their services. And the reason that providers didn’t kick up a fuss about that is because they knew they would see those payment reductions being MORE than balanced out when Obamacare is implemented. Millions of people who had no insurance and never used regular provider services will become paying health care insurance customers, and they will be getting more regular medical care. So there’s less wasteful spending in Medicare, and private health care providers still make money, while Medicare recipients lose no benefits. It’s a win-win-win scenario. In contrast, Romney wants to put that $716 billion in overpayments back the way it was, and then REMOVE that same amount from the benefits that Medicare users receive. He wants to give back the excess money we’ve been paying out, and to do that he wants to ask seniors to make do with less. I’m sorry, that is something else that makes no sense to me. I would rather have a president who targets wasteful spending as his first strategy, rather than cutting benefits as his first strategy.

  7. Chris ,

    Thank you for the discussion . I have thoroughly read your last remark. I disagree with your conclusions but, you at least support them with what you believe are facts . I could continue to attack your arguments point by point, but for now I leave you with the last word .

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