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August 9, 2009
Recovering Backwards
To the extent that believing in economic recovery precipitates it, it is arguably a good thing for the Providence Journal to splash the headline, "Economic rebound seen as job losses drop in July," over a story from the New York Times. On the other hand, the whiff of dishonesty to the project may prove more powerful than the cheerleading:
Employers eliminated 247,000 jobs in July, a huge number by the standards of an ordinary recession, but the smallest monthly loss since last August, the Bureau of Labor Statistics reported. And the unemployment rate, rising for months, actually ticked down, to 9.4 percent from 9.5 percent in June, mainly because so many people dropped out of the hunt for work, ceasing to list themselves as unemployed.
One must read way down (thumb through the pages in the print edition) to read the obsidian lining elaborated:
Thousands of others are giving up. More than 400,000 who had been looking for work dropped out of the labor force in July, not even bothering to tell government pollsters that they would accept a job, part time or full time, if one came their way. ...A broader measure of the nation’s unemployment, which includes people too discouraged to look for work or forced to work only part time, slipped to 16.3 percent from its peak of 16.5 percent in June.
If the slowing decreases continue and the economy turns the corner in the near future, then people will likely infer that it just happens this way. If the recession continues beyond expectations, readers will have more evidence that the news industry is less interested in information than in promotion, in this case of the American president who made the haughty claim that his administration "rescued our economy from catastrophe."
It would seem that circumstances are already pretty catastrophic for the 400,000 who just gave up looking for work during a one-month span.
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As with all "government numbers", they can rarely be accepted at face value. As with all labor statistics, the people who hae given up looking for work have never been counted. Interestingly, people undergoing "frictional unemployment" (unemployed between known jobs) have always been counted.
Look at the "numbers" generated for the "Clunker Law". All Toyota Corollas are treated as one model, while Ford F-150's and Chevy Silveradoes are counted as 4 different models each. The distinction was made accorsing to engine and drivetrain combinations. It made it appear that Americans were buying more "economy cars". In fact, they were loading up on large pick-ups.
Posted by: Warrington Faust at August 9, 2009 5:15 PM