January 6, 2013

Reactions to December Employment Report: Pethokoukis, IBD, WSJ

Filed under: Economy,Taxes & Government — Tom @ 8:35 am

James Pethokoukis (bolds are his):

Dismal December jobs report shows another lost year for US workers


Let’s run through some more of the December numbers to gain some perspective:

14.4%: The U-6 unemployment rate, which includes a) part-timers who want full-time work and b) the discouraged who want a job but haven’t searched for work in the prior month because they believe no jobs are available. Same as November.

10.7%: The U-3 unemployment rate if the labor force participation rate were back to its January 2009 level, when President Obama took office.

10.4%: The U-3 unemployment rate if the labor force participation rate were at the 2012 level predicted by the Congressional Budget Office before the Great Recession. This assumes that as the US ages, the LFP will continue to decline.

And this ….

5.2%: The unemployment rate that Team Obama predicted for December 2012 if Congress passed the $800 billion stimulus.

Investor’s Business Daily (bolds are mine in the rest of this post):

(Browser Window Title) Another Lousy Jobs Report Extends Obama’s Wretched Performance

We’re told Friday’s jobs report is evidence of slow and steady progress. But it actually documents the new normal of Obama’s economy — anemic job growth, chronic long-term unemployment and falling wages.

The 155,000 new jobs created in December weren’t enough to make a dent in unemployment. And at this pace, it will take more than two years just to reach the previous jobs peak set back in January 2008.

And while the unemployment rate of 7.8% appears to be the same as when Obama took office, it obscures the fact that millions have given up looking for jobs and so aren’t being counted as unemployed.

If you account for the unprecedented drop in labor participation under Obama, the real unemployment rate is 10.7%.

Meanwhile, the pool of long-term unemployed was a staggering 4.8 million in December, which is 2 million more than when Obama took office. The average length of unemployment was 38 months — almost 20 months longer than four years ago and 15 months longer than when the recession ended in June 2009.

… real average weekly earnings have dropped about 1% over the past two years, according to the Bureau of Labor Statistics. And median household income is down 7% since January 2009, according to Sentier Research.

At the Wall Street Journal, an editorial argues that only what the Fed does matters:

Meanwhile, back in the real economy, slow growth continues to define the job market. The economy created 155,000 net new jobs, essentially the same as the 153,000 average monthly pace for all of 2012, which was the same as the average monthly gain in 2011. The jobless rate stayed at 7.8%, after the November rate had been adjusted up a tic from 7.7% due to the Labor Department’s annual revisions.

For the year the economy created about 1.84 million new jobs, which is consistent with the plodding expansion and is barely keeping up with new entrants into the job market. In previous and healthier expansions, the economy created 2.5 million or more net new jobs a year.

The overall labor participation rate actually fell during 2012—to 63.6% of the civilian population from 64% in December 2011. The rate is now down to where it last was in 1981. That suggests more Americans have given up looking for work, gone on disability or retired prematurely because they couldn’t find work.

The December jobs survey is the last one before the tax and spending increases of the fiscal-cliff deal kick in. …

The Keynesians who run the U.S. economy these days are predicting better days ahead now that the worst of the fiscal cliff has been dodged and the housing market is coming back. We’ll see if they’re right, but meanwhile markets are likely to keep their eyes mainly on the masters of the economic universe at the Fed.

The housing market isn’t really “coming back” (graphic is a month old, but updated info hasn’t changed things meaningfully). After shrinking by about well over 60% from it pre-bubble peak, it’s such a small part of the economy that the sector’s growth would have to be explosive to make a difference.

Unfortunately, the Fed can only manipulate. It doesn’t create anything of intrinsic economic value.



  1. Slope of curve interesting. It matches the “without” theoretical curve. Of course, they said the economy was worse than they thought, and that is why the raw unemployment error. But one would (grossly) assume the stimulus impact would be still be a quicker return than predicted. With a parallel curve, it resembles “no impact.”

    Comment by Jim — January 6, 2013 @ 5:09 pm

  2. On the other hand, they could just claim you could superimpose their “with recovery plan” on the actual rate curve to prove an impact. But then the “without” curve is entirely theoretical.

    Comment by Jim — January 6, 2013 @ 5:12 pm

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