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September 07, 2007


I'm no economist, but this doesn't look good:


Some might say that the unemployment rate hasn't dipped -- it's still at a fairly low 4.6 percent -- but even that's not necessarily a comfort. EPI says: "The reason August's unemployment rate was unchanged was due to a large monthly fall off—down 340,000—in the labor force (those who leave the labor force are not counted among the unemployed). In other words, the unemployment rate was unchanged due to fewer job seekers, not more jobs."

September 7, 2007 | Permalink


Yea, verily, what you want is the labor force participation rate, not the unemployment rate.

Posted by: paperwight | Sep 7, 2007 12:15:48 PM

This shell game is nothing new. Like most other disinformation pumping out of the administration these days, it must be parsed and contextualized before digesting. Check out the Bureau of Labor Statistics "augmented unemployment rate" which stands at around 7.4% (or 10.5 million people out the estimated 143 million in the labor pool). This rate is "augmented" by the fact that it includes the ever expanding group of the disenfranchised who have been looking for full-time work but cannot and have exhausted any access to Unemployment Insurance. These folks just *POOF* themselves out of the way so that the silly 4.5% number can get trotted out. 4.5% is roughly 6.4 million folks so that's quite a difference!

Posted by: bedtime4democracy | Sep 7, 2007 1:57:21 PM

Rumor has it some illegals have left for friendlier climes which may account for the drop in the labor force.

Posted by: James B. Shearer | Sep 7, 2007 2:05:00 PM

Up here in Maine I see a lot of one-truck contractors -- plumbers, painers, sheet-rock guys, landscapers -- who aren't anyone's employee, and so can't properly speaking be unemployed.

And they are hurting. They probably let go the one or two guys they hire a month or six ago.

They're writing bad checks to pay for gas -- the back wall and register at the local gas-coffee-sandwich place is festooned with them.

Does BLS count these guys, or are they invisible?

Posted by: Davis X. Machina | Sep 7, 2007 2:13:57 PM

One factor of note is that there have been huge waves of layoffs in the mortgage industry, waves that may be enough to swamp some of the signal to noise here.

MSNBC ran this on the 22nd Mortgage industry job cuts surpass 40,000
Companies stop 'on a dime'; 25,000 positions eliminated so far this month

And just today the NYT ran More Layoffs in Mortgage Industry

That chart reasonably overlaps with the shutdown of sub-prime lending generally which started with smaller companies in the early Spring and then spreading to the bigger players this summer culminating in the articles we are seeing. 25,000 jobs in a single sector in a month is a lot, when you add in sidelined construction workers, could mean that most of the damage is still relatively confined to housing. Which seems to be Bernanke's take.

Posted by: Bruce Webb | Sep 7, 2007 3:39:02 PM

I would prefer year-on-year comparisone, ie. August 07 - August 06 - etc. That means that this note is the more interesting: "...the first monthly decline since August 2003..."

Posted by: Jacob Christensen | Sep 7, 2007 4:04:23 PM

For a year on year comparison, the seasonally adjusted unemployment rate stands at exactly the same level as last August, 8.4%. Last year, it dropped from that level down to the neighborhood of 8.0%, until beginning its steady return since March of this year.

Of course, that is the U6 unemployment rate, which gives a more effective indication of at least the direction of changes in labor underutilization than the U3 rate used as the headline rate.

Posted by: BruceMcF | Sep 7, 2007 8:19:14 PM

The Labor Dept. under The Decider reminds me of Kevin Bacon at the end of "Animal House".

Posted by: Joe Klein's conscience | Sep 7, 2007 10:10:55 PM

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