David Kirkpatrick

August 7, 2009

Unemployment — more “good” bad news

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 2:06 pm

In yet another case of calling bad news an encouraging sign (and as much as I’ve derided the practice, even I dipped a toe in that pool) the latest jobs report is bad — but, wait for it — it isn’t as bad as expected.

Here’s three links from the New York Times today on the topic: the news report, an Economix blog putting positive spin on the report and Floyd Norris bringing things back to reality.

The Old Grey Lady news:

The most hopeful jobs report since last summer suggested Friday that the recession was ending, but the recovery will be marked by a still-rising unemployment rate and tens of thousands of job losses each month until next year.

The American economy shed 247,000 jobs last month, the smallest monthly toll since last August, the government reported on Friday. While businesses are expected to keep cutting positions through the rest of the year, the Labor Department’s latest figuresoffered hopeful signs for the American worker and a measure of relief to the Obama administration, which has faced rising criticism as unemployment blew past its earlier projections.

“The trend lines are positive,” said Mark Zandi, chief economist at Moody’s Economy.com. “We are going from massive job losses to just big job losses on our way to a stable job market, I think by next spring.”

A bit of bloggy pollyannaish spin:

The story of today’s jobs report is pretty simple: given what was expected, it’s very good news.

The economy lost significantly fewer jobs in July than expected. Forecasters were predicting a loss of about 325,000 jobs in June. The actual loss was 247,000 — the smallest since August 2008.

The average hourly pay of rank-and-file workers, which had been flat in June, rose 3 cents in July, to $18.56 an hour. That wage is up 2.5 percent over the past year, while inflation has been roughly zero. So the average person who’s still employed has actually received a raise in the last year.

The average private-sector workweek increased by one-tenth of an hour, to 33.1. It was the first increase since last summer.

And the government said that the economy had shed somewhat fewer jobs in May and June than previously estimated.

And now Norris getting this topic back on firmer ground:

There are clear signs that world economy is turning up, or at least not sinking further, but today’s jobs report is not a bright spot. The unemployment rate went down, from 9.5 percent to 9.4 percent, but that is statistically unimportant given the sampling error in the household survey. In any case, it fell not because more people said they had jobs — employment was down in that survey — but because fewer people were still looking for work.

The key to Norris’ point is that last line. As the unemployed give up and stop looking for work they are no longer “unemployed.” Sure they aren’t working, but since they are seeking employment they aren’t considered unemployed. Last fall the Bush administration used the same rationale to attempt and spin up negative jobs reports. This thing ain’t over by a long shot.

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