Saturday, October 6, 2012

7.8% Unemployment and 114,000 New Jobs ... Satisfied Yet?

Of September's jobs numbers, President Obama says that "This country has come too far to turn back."  Stay the course, in other words.

Meanwhile, Mitt Romney says that "We don't have to stay on the path we're on. We can do better." Change the course, in other words.

So let's examine yesterday's much talked about unemployment report and make up our own minds about what it means. To me it was more of the same and definitely not a game changer in any way. On the other hand, and unlike the unemployment numbers released yesterday, Romney's performance in the presidential debate on Wednesday night may very well have made the election a close and exciting horse race to the very end.

But herein we'll stick to discussing yesterday's September unemployment numbers.

7.8% unemployment at this time compares to the 5.6% rate the president forecast at the outset of his term that we'd have today if we followed his "plan." Well, we did.

And 7.8% is a far cry from the projected 5.6%. That's a huge miss no matter who's keeping score.

And 114,000 in monthly jobs creation isn't enough to reduce the unemployment rate to ~5.6% for another ten years. Even if that's fast enough for our President, it's not fast enough for the 23 million people unemployed or underemployed today. It's not even making progress on the road to recovery.

Jobless See Little Improvement in Outlook says this about the unemployment issue:

"Fewer than one in five job-seekers found work last month . . . .

Today, about 2.9 million more Americans are working than a year ago, and other gauges of the health of the labor market—such as the unemployment rate and the number of job openings—show signs of gradual improvement. Friday's report suggests job growth has been stronger over the past three months than previously believed.

But for unemployed workers, especially those out of work for extended periods, progress has been painfully slow. For most of the 1990s and early 2000s, between 25% and 30% of job seekers found work in any given month, and most found a job within three months. . . .


Some 4.8 million people—40% of all the unemployed—have been looking for more than six months. Unemployed workers are now more likely to quit looking than to find a job.

Such slow progress underscores the long-term disruptions caused by what was by many measures the worst recession since the Great Depression of the 1930s. Trends that had been relatively steady for decades shifted dramatically in the recession, and will take years—possibly many years—to return to their earlier path.

When the recession began in late 2007, for example, almost exactly two-thirds of the adult population, or 66%, were in the labor force, meaning they were either working or looking for work. That number was trending down due to the aging population, but only gradually; it took six years to fall a single percentage point.

The recession, however, led a flood of people to leave the workforce as they went back to school, stayed home with children or were forced into early retirement. The share of adults in the labor force, known as the "participation rate," fell an unprecedented two percentage points from the end of 2007 to the end of 2011, and continued to fall this year. The rate ticked up a tenth of a percentage point last month but remains near a 30-year low. . . .

Broader measures suggest there are still millions of Americans sitting on the sidelines. In September, 2.5 million people wanted to work and had searched for a job within the past year but didn't count as unemployed because they hadn't actively looked in the past month. That figure has barely budged in the past two years. Another 3.3 million people say they want a job but haven't looked in over a year, a number that has grown in the past year.

Economists don't know how many of those people would actually return to work if the economy rebounded; some have likely left the labor force for good. But by any measure, there are millions of people who want to work but aren't formally counted among the unemployed. The 114,000 jobs created in September will do little to make a dent in that number."

Summing Up

Although the "official" unemployment rate falling from 8.1% to 7.8% undoubtedly makes a good talking point for the Obama campaign, the 114,000 new jobs number doesn't represent anything remotely close to returning to a healthy or normalized employment situation.

Nevertheless, President Obama says we've come too far to turn back. That reminds of the old saying that if you don't care when you're planning to arrive or even know where you're going, let alone how fast you're moving, any road will get you there on time.

And other than growing government at the expense of the private sector, uttering divisive feel good slogans about saving the middle class, hiring more government workers and making what he calls the millionaires and billionaires pay up in an effort to win more votes and reelection, Mr. Obama apparently doesn't have any plan to grow the economy and get people back to work.

He simply says that an unemployment rate of 7.8% is a proper substitute for the 5.6% he promised earlier in his term. We're on the right road and moving at the right speed, according to him.

Mitt Romney says we don't have to stay on the path we're on and can do better. I say we can't afford to stay on the same path and that we must do better.

My bet is that tens of millions of Americans agree with me on that. But whether that's enough of We the People to vote for a change in direction and speed in November, I don't know.

However, this much I do know. Whoever is elected, the American people won't be defeated.

In the end, we'll persevere and win this morality based ball game for the hearts and souls of our fellow Americans, even if it takes us a few more years or extra innings to do so.

Thanks. Bob.

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