The U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected, providing the clearest sign yet that the economy was turning around.
Employers shed 247,000 jobs in July, the Labor Department said Friday, the least in any one month since last August, taking the unemployment rate to 9.4 percent, down from 9.5 percent in June.
“It suggests the recession will be ending before the end of the year. There isn’t any part of the economy that hasn’t shown some slowing in deterioration,” said Joe Davis, chief economist at Vanguard in Valley Forge, Pennsylvania.
Recent data ranging from home sales to manufacturing have pointed to an economy starting to dig itself out of one of the worst recessions since the Great Depression of the 1930s.
Don’t start celebrating yet folks, as Jim Geraghty and James Pethokoukis point out the devil is in the details:
Hmm. In June, the Bureau of Labor Statistics said the civilian labor force was 154,926,000 people.
In a work for of June’s number of 154,926,000, that’s an unemployment rate of 9.8 percent.
In July, 796,000 of those were taken out of their definition of the workforce, and thus their unemployment calculations for this month, because they have stopped looking for work “because they believe no jobs are available for them.” Ten percent of the June workforce would be 15.4 million, 1 percent would be 1.5 million, and so 796,000 is roughly one half of one percent.
In other words, BLS took .5 percent of what you and I would consider unemployed and took them out of their total. And with that, unemployment went down one tenth of one percent.
Of course, if you take the July number of unemployed, 14.5 million, and add that 796,000 of discouraged workers, you get a total of 15,296,000.
In a work force of July’s number of 154,504,000, that’s an unemployment rate of 9.9 percent.
Bottom line: there’s no good news in the July jobs report… Among other things the report shows that the number of long-term unemployed (those jobless for 27 weeks or more) rose by 584,000 over the month to 5.0 million and that the civilian labor force participation rate declined by 0.2 percentage point in July to 65.5 percent.
Yes unemployment dropped, but it didn’t drop because the economy is improving, it dropped because of a declining workforce.
- What Do Unemployment Figures Mean? – Washington Post
- President Obama Predicts Unemployment Will Hit 10% This Year – ABC News
[…] that the economy hasn’t “relapsed”. Outside of small decline in July because of a statistical anomaly the unemployment rate has been rising steadily all year. In fact October’s month-over-month […]