The employment survey indicated the number of people working fell but then the household survey showed a lower unemployment rate. While some say this is good news, the best I think we can say is that it does not suck as much as what we saw in terms of changes in prior months.
The phenomena of a falling unemployment rate during a period when the employment survey shows a decline can be attributed to a couple of possibilities both of which were present during November. The household survey showed an increase in employment even if the employment survey indicated a decline. Some labor market economists would argue that the employment survey is a more reliable indicator of recent labor market developments. But we should also note that while the household survey suggested an absolute increase in employment, the employment to population ratio (graphed as EP) remained at a paltry 58.5 percent. So why did the reported unemployment rate decline – because the labor force participation (LFP) continued to decline. Yes – the unemployment rate has skyrocketed since 2006 but the real message is that the decline in the labor force participation rate masks the horrific decline in the percentage of the employment that is employed.
On a political note, however, this administration isn’t exactly crowing about how wonderful the labor market is (recall the previous administration often cheered whenever the reported unemployment rate showed even the slightest dip) as it is willing to admit we need to do a lot more to stimulate this economy and put people back to work.
The drop in the household survey unemployment is explained by "baby boomers" taking early Social Security retirment. Total Social Security retirees has increased by more than a million this year; a massive record spike. Blame the decline in the unemployment rate on demographics not government statistics.
ReplyDeletepgl,
ReplyDeleteIs it not the case that whether or not employment rose or fell last month, the wave of layoffs has dramatically slowed and we may have hit bottom in this cycle with regard to the labor market? Hitting bottom is the necessary prelude to starting to go back up again (which may have in fact happened), even if there is a long way to go and it will take a long time to get things noticeably better.
If indeed there was a "massive spike" in early SS retirement, it'd be reasonable to attribute it to "lost hope" dropouts who are no longer seeking jobs.
ReplyDeleteThat sounds more like rational calculation around an awful situation than "demographics."