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March 09, 2012

February Jobs Numbers - Updated

Just ahead of today's February Employment Situation Summary from the Bureau of Labor Statistics, Spencer Jakab of the Wall Street Journal suggested that we might curb our enthusiasm.

Consensus expectations are for growth of 210,000 in nonfarm payrolls, though those may well be too conservative. FTN Financial says the interest-rate yield curve suggests markets expect slightly more. Wednesday's private-sector jobs report from payroll firm Automatic Data Processing also implies better gains.

But the official jobs figure, by its nature, invites skepticism, even from Federal Reserve Chairman Ben Bernanke.

This morning, here come the numbers from the Bureau of Labor Statistics.

THE EMPLOYMENT SITUATION -- FEBRUARY 2012

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Though the employment picture was not as good as was reported in January, it beat expectations by 17,000 nonfarm payroll employees.  And in even better news, the BLS adjusted their December and January numbers upwards.

The change in total nonfarm payroll employment for December was revised from +203,000 to +223,000, and the change for January was revised from +243,000 to +284,000.

But seasonal adjustments sometimes make for an overly optimistic employment trend. Says Mr. Jakab, "investors are right to worry that jobs data may be more show than reality."

The quickly improving trend resembles that often seen in the early part of a recovery. January's unemployment rate of 8.3% was 0.6 percentage point lower than in October. Some optimistic forecasters see it falling below 8% before the year is out.

But economist Madeline Schnapp of TrimTabs Investment Research estimates that only 149,000 jobs actually were added last month, based on real-time income-tax-withholding data. She also estimates there were only 181,000 jobs added in January versus the government's reported 243,000, itself a positive surprise.

If such skeptics are indeed right, there is a good chance the economy hasn't quite reached "escape velocity" from the downturn's clutches.

According to BLS numbers unemployment remained unchanged from January at 8.3 percent, a misleading number since it doesn't reflect the number of people who have either temporarily or permanently given up looking for work.  The numbers that Gallup reported on Wednesday paint a much bleaker picture.

The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November. A year ago, Gallup recorded a February increase of 0.4 percentage points, to 10.3% from 9.9% in January 2011.

In addition to the 9.1% of U.S. workers who are unemployed, 10.0% are working part time but want full-time work. This percentage is similar to the 10.1% in January, but is higher than the 9.6% of February 2011.

There is a recovery going on, but it's difficult to say how strong.  Economic growth eventually has to happen in spite of our president.  Who can say what it might have been without Barack Obama holding the federal thumb so firmly down on domestic oil and gas production.

On federal lands, oil production declined 11 percent from 2010 to 2011, according to the pro-drilling Institute for Energy Research. On state and private lands, production increased 14 percent. Natural-gas production on federal lands dropped 27 percent from 2009, and increased 28 percent on state and private lands. The president took credit for a trend with which he had nothing to do and which he has tried to obstruct.

Leases for onshore exploration under the Obama administration are down roughly 35 percent from the Bush administration and 70 percent from the Clinton administration.

In the meantime the administration squanders billions on green subsidies and bankrupt solar companies.  No doubt the administration will celebrate the improving employment picture.  But think of what it might be without Barack Obama actively suppressing job creation in the domestic oil and gas industries while spending hundreds of millions in tax dollars on solar companies that are laying people off.

Update:  James Pethokoukis provides some more perspective on the unemployment numbers.  Emphasis in the original.

Even if it were a legit number, the 8.3% February unemployment rate, released today by the Labor Department, would be simply terrible – and unacceptable. It would still extend the longest streak of 8%-plus unemployment since the Great Depression. The U.S. economy hasn’t been below 8% unemployment since Obama took office in January 2009. And back in May 2007, unemployment was just 4.4%.

But, unfortunately, the true measure of U.S. unemployment is much, much worse.

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.4%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.5%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.9%.

Posted by Tom Bowler at 10:09 AM | Permalink

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Comments

Thank you for a great thread it's a very detailed look at the problem. This week's news droned on and on about this one headline statistic. Made it sound like things were A-OK. Far from it. I'm one of the untold numbers of underemployed people just lucky to have any work at all.

Posted by: Colonel Mustard | Mar 10, 2012 10:54:35 AM

Thanks, Colonel. Though things are not at all A-OK, the mainstream media is going to report that they are in hopes of getting Barack Obama re-elected. Unfortunately for MSM, more and more people are on to them. Unfortunately for us, the real recovery is still a presidential election away. Just one, I hope. In the meantime, I do wish you the best of luck on the employment front.

Posted by: Tom Bowler | Mar 10, 2012 3:27:00 PM