Unemployment Rate Drops Because More Workers Give Up Looking
First, the good news: it was reported this morning by the Bush Labor Department that the nation's unemployment rate dropped to 5.7%. That's the end of the good news.
Now the bad news: the reason the rate dropped is that 300,000 workers (yes, you read that correctly, 300,000) gave up looking for work last month, a month where there should have been some holiday hiring and where we were told by the experts that sustainable job growth was now upon us.
Even more bad news: although the experts told us that the economy was expected in December to add over 100,000 new jobs in December, only 1,000 were added, the worst performance in months. That's right, only 1,000 jobs in the entire country, with low mortgage interest rates and, we are told, a booming service sector.
And even more bad news: both the manufacturing sectors and the retail sectors did worse than expected last month, and on top of that, the sunny numbers touted by the Administration for November were revised downward today, making that month not as good as was spun originally.
And even more bad news on top of this: Challenger and Gray announced earlier this week that employers announced another 93,000 planned layoffs in December.
Oh, by the way, when these stories come out from now on about how good things are about to get, and you see quotes from economists or shills for the administration, take it with a grain of salt. Just yesterday, in a story that reported on the rise in weekly new claims for unemployment, both the AP and their quoted expert tried to put a positive spin on the increase in new claims:
Despite last week's rise, claims have remained below 400,000 for 14 consecutive weeks, which economists view as a sign that the fragile jobs market appears to be turning a crucial corner.
In the last recession, job growth began surging once weekly unemployment claims had fallen to around 350,000, said economist Ken Mayland, president of ClearView Economics. He expects the same this time around, with strong jobs numbers appearing in the early spring.
"Get ready, buckle up, because I think that is a good model for thinking about the current situation," Mayland said. "We are right at about that level now, and I expect payroll growth to really ramp up."
U.S. companies have added just 328,000 new jobs in the past four months, and analysts have been looking for stronger growth. Mayland said he predicts that companies added about 135,000 new jobs last month.
That's OK Mr. Mayland. You were only off 134,000 thousand jobs in your prediction.
In the future, if you see anyone try and spin increases in weekly claims filings as a good thing because good times are just around the corner, remember these two days. For an economy like ours to only add 1,000 new jobs in a month, defies all spin from any corner.