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August 7, 2009
The Decline in July Unemployment Really Means An Increase
President Obama interprets the decline in the official unemployment rate from June's 9.5% to July's 9.4% as a sign of "light at the end of the tunnel." But it's more likely a on-coming train.
President Barack Obama said the dip in the unemployment rate to 9.4 percent means he "can see a light at the end of the tunnel" and that "the worst may be behind us." (Source)
And, CNN reported that Obama said,
"Today, we're pointed in the right direction. We're losing jobs at less than half the rate we were when I took office," Obama said at the White House.
The somewhat misleading lede in the Reuters article featured on the DRUGE REPORT today, under the heading "9.4%," begins,
WASHINGTON (Reuters) - 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.
Clear? To whom? How do 247,000 more people unemployed in July than June translate into a decline in the unemployment rate?
In a phone interview today with the Reuters reporter who wrote the piece, Lucia Mutikani, she confirmed and elaborated on several of the facts in her article. While the number of people in the job market declined by 155,000 in June, it went down 422,000 in July. She suggested that "most likely people get tired or discouraged" and that "people left the job market" as the civilian labor force decreased. "Labor actually went down," she said.
So, while the President and some in the legacy media tout the 9.4% figure for July as a decline in unemployment from June, the statistic is based on a shrinking labor force. It's like a general saying, "The army's casualty rate this month went down slightly from last month, but then one of our divisions has deserted." That would not be a military force "pointed in the right direction" with the worst behind it.
The light at the end of the tunnel Obama's seeing isn't the end of the darkness -- it's an oncoming train, based on these unemployment figures anyway. To conclude otherwise is an exercise in seriously tortured logic.