Economic Up Is Down
Do you think there comes a point at which people simply stop listening to measurements? As the latest national unemployment numbers rolled out, one certainly got the impression that the news was positive, that recovery is just around the corner. Yet:
U.S. payrolls unexpectedly fell in January, but the unemployment rate surprisingly dropped to a five-month low, according to a government report Friday that hinted at labor market improvement. …
While a sharp increase in the number of people giving up looking for work helped to depress the jobless rate, some details of the employment report were encouraging. The number of “discouraged job seekers” rose to 1.1 million in January from 734,000 a year ago.
The storyline is becoming repetitive. It seems that every time the unemployment numbers drop, lately, it turns out to be a result of discouraged people giving up. In this case, the Reuters reporter is downright confusing. Increasing numbers of “discouraged job seekers” represent an “encouraging detail”? Of course not, but it’s as if one can read right through the text and see the will to spin behind it.
And as expected, Administration officials are crowing about the “decline” in the official unemployment rate.
Of course, nobody except college econometrics students are taught what goes into the official employment statistics and what they mean.
Another large group that the official statistics do not capture is small business owners whose businesses fail. Because owners are not eligible for unemployment benefits they do not file and therefore are not captured by the Department of Labor methodology.
While unemployment rates are probably not accurate in themselves, they are probably accurate as indicators. You don’t need to test every sector of a boiling pot to know that it is hot. If 5% were unemployed last year, and 10% are unemployed this year; then things are probably twice as bad as they were last year.