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January 7, 2011
Labor Force Participation Rate Drops To New 25 Year Low - Adjusted Unemployment Rate Now At 11.7%
Topics: Political News and commentariesSo the unemployment number came in at a low 9.4%, but it did so for one reason and one reason only, and it has nothing to do with jobs being created:
As Tyler Durden explains at Zerohedge.com:
As Ross Kaminsky points out at American Spectator, don't be surprised to see the unemployment number tick back up again:
While today's unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66% means that the civilian force which in December came at 153,690, a drop of 260,000 since November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%.
The economy needs to create about 125,000 jobs a month to prevent a rising unemployment rate, so how did the rate drop so much with a gain of only 103,000 jobs? The number of umemployed dropped by 556,000 jobs in large part due to a drop in the civilian labor force participation rate and increase in discouraged workers, namely people who are not counted as unemployed because they have given up looking for a job.As for the prospect of the jobless rate dropping anytime soon, Fed boss Bernanke says it will take years for jobs to come back.The next couple of months will be interesting. While economic data is pointing to a recovery of sorts, job growth is not keeping pace. The public looks much more at the unemployment rate than at the number of jobs created, not least because the rate is the number most widely discussed in the mass media. If discouraged workers decide to start looking for jobs again but the economy is still only producing about 100,000 or even up to 150,000 jobs per month, it will not be surprising to see the unemployment rate tick up again.
Other coverage: Bill Jacobson has much more: Key Numbers In Unemployment Report Not So Good
Posted by Richard at January 7, 2011 10:30 AM
Articles Related to Political News and commentaries:
- Labor Force Participation Rate Drops To New 25 Year Low - Adjusted Unemployment Rate Now At 11.7% - Jan 07, 2011
