The 7.8% Unemployment Rate in Context

Yossi Gestetner
I agree with the editors of Saturday's Wall Street Journal who argued that resorting to conspiracies to explain the drop in the Unemployment Rate detracts from the issue at hand: The job market is a bloody mess even with the numbers given. Here are some examples:

● The 7.8% UR is as bad as January 2009 when we were deep in the "worst recession since the great depression." How is this good news?

● In September 2008, exactly four years ago, the UR was at 6.1%. At the time we were headed downhill, but if after three years into a "recovery" and "heading in the right direction" we are worse off than deep into "The Bush Recession", then it's time for new policies.

● Obama noted Friday that "more people entered the workforce" in September. If he is aware of the workforce size, then he perhaps also knows that 1.1 million left the workforce since January, giving us a rate of 7.8% instead of 8.3%.

● If millions had left the workforce during the final Bush months at the same rate as they have left under Obama, the 7.8% UR of January 2009 would be 4.9%! Alternately, if the workforce (counted as those who have jobs or who are looking for a job) was now as large as it was when Obama came into office, the UR in September would be 10.7%.

● Speaking of September unemployment uates, here is how they looked throughout the "failed Bush years":

September 2002 -- despite the dot.com bust, 9/11 attacks; 1990s business corruption exposures: 5.7%.

September 2004, just before the Bush re-election: 5.4%.

September 2006, before the midterms: 4.5%.

September 2008, a year into a recession: 6.1%. The numbers would be lower had millions left or simply not joined the workforce as it is now happening in the Obama 'recovery'.                     

 And to those who compare the current falling UR to 1984, when Reagan ran for re-election, keep in mind that it fell because from January through September of 1984 the economy gained... 3.1 million jobs! That's a rate of 345,000 jobs per month vs. the 2012 rate of 145,000 jobs per month.

But of course... "trickle down" didn't work, yet the stimulus is doing great...

 

I agree with the editors of Saturday's Wall Street Journal who argued that resorting to conspiracies to explain the drop in the Unemployment Rate detracts from the issue at hand: The job market is a bloody mess even with the numbers given. Here are some examples:

● The 7.8% UR is as bad as January 2009 when we were deep in the "worst recession since the great depression." How is this good news?

● In September 2008, exactly four years ago, the UR was at 6.1%. At the time we were headed downhill, but if after three years into a "recovery" and "heading in the right direction" we are worse off than deep into "The Bush Recession", then it's time for new policies.

● Obama noted Friday that "more people entered the workforce" in September. If he is aware of the workforce size, then he perhaps also knows that 1.1 million left the workforce since January, giving us a rate of 7.8% instead of 8.3%.

● If millions had left the workforce during the final Bush months at the same rate as they have left under Obama, the 7.8% UR of January 2009 would be 4.9%! Alternately, if the workforce (counted as those who have jobs or who are looking for a job) was now as large as it was when Obama came into office, the UR in September would be 10.7%.

● Speaking of September unemployment uates, here is how they looked throughout the "failed Bush years":

September 2002 -- despite the dot.com bust, 9/11 attacks; 1990s business corruption exposures: 5.7%.

September 2004, just before the Bush re-election: 5.4%.

September 2006, before the midterms: 4.5%.

September 2008, a year into a recession: 6.1%. The numbers would be lower had millions left or simply not joined the workforce as it is now happening in the Obama 'recovery'.                     

 And to those who compare the current falling UR to 1984, when Reagan ran for re-election, keep in mind that it fell because from January through September of 1984 the economy gained... 3.1 million jobs! That's a rate of 345,000 jobs per month vs. the 2012 rate of 145,000 jobs per month.

But of course... "trickle down" didn't work, yet the stimulus is doing great...