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5% Unemployment Rate, Stimulus, and the July Jobs Report

The Huffington Post's headline for its story about the July jobs report pretty much summed it up, saying the report "masks real problems in the labor market." Here's the lede:

"Fed Chairman Ben Bernanke has said the official U.S. unemployment rate could mask the real problems in the labor market. He got proof of that in July's jobs report.

"The unemployment rate dipped to 7.4 percent in July, the lowest rate since December 2008, the Bureau of Labor Statistics reported on Friday, down from 7.6 percent in June.

"But payroll growth was anemic, wages dropped and more discouraged workers headed for the sidelines, continuing the slowest job-market recovery since World War II."

CNBC began their analysis of the July jobs report yesterday, saying:

"Job growth continued in July as the U.S. economy added another 162,000 positions—enough to keep the recovery theme going but not a level likely to have a major effect on monetary policy.

"The number missed economist expectations of 184,000 and caused some movement in markets."

CNBC' added that the prior month's "job creation numbers were revised lower, bucking a trend in which the counts mainly have been taken up."

Yesterday, at Zero-Hedge (HT Mark Levin Show), Tyler Durden focuses on the problem the economy is generating primarily part-time jobs, e.g., "of 953,000 jobs created in 2013, 77%, or 731,000 jobs are part-time."

Hot Air's Erika Johnsen writes, "For July, some of the top-line employment numbers actually look pretty good — and when I say “good,” I do mean that in the most relative sense of the word, because nothing going on here would ever be classified as anything more than piddling near-stagnation in a time of actual substantive economic growth — but let’s not be too hasty." She then quotes a Bloomberg report and several Tweets. Especially interesting is Jim Pethokoukis's who Tweeted:

"If labor force participation were back at July 2012 level, the unemployment rate would 7.8%; 10.7% at Jan. 2009 level."

In a second Hot Air post, Mary Katherine Ham provides "five scary charts and facts about who's working and not working in this economy."

Bloomberg's BusinessWeek provides a comprehensive analysis of the July jobs report in a piece entitled, "July Jobs Report is Packed with Bad News" written by Matthew Philips. He includes these three paragraphs:

"The July report is actually packed with fairly cruddy news. The previous two months’ job gains were revised down by a total of 26,000 jobs. Wages fell. The workweek got shorter for just about everyone. And the labor force participation rate declined. Not exactly going in the right direction.

"The report dampens what had been a week of reasonably good economic data: On Thursday we got the strongest reading of manufacturing activity in two years. And a strong ADP report showed the private sector added 200,000 jobs in July. Claims for jobless benefits are also at their lowest level since January 2008; consumers are more confident than they’ve been since early 2008.

"And yet, all the fundamentals showed little to no change in July’s BLS report. The number of long-term unemployed was flat at 4.2 million. There are still 988,000 discouraged workers out there—these are people not currently looking for a job because they don’t think they can find one. That’s up from 852,000 a year earlier. The number of people working part time for economic reasons bounced up by 19,000."

The inimitable James Pethokoukis asks at the American Enterprise Institute's blog, AEIdeals, "Where's that 5% unemployment rate Obama promised by now?" Here's the chart that accompanies the post.

Pethokoukis explains:

"In January 2009, Team Obama economists put together a report – half quantitative analysis, half sales pitch — outlining the potential economic impact of the proposed $800 billion stimulus. (See above chart from that report.) If Congress passed the plan, the report forecasted, the economy would generate enough additional demand, output, and employment that two big things would happen:

First, the unemployment rate would never reach 8%. Unfortunately, we hit 10% unemployment in October 2009. Failure number one.

"Second, the unemployment rate would return to its long-term “natural rate” of 5% by July 2013 (a jobless rate, it should be noted, above the low points of the Bush and Clinton presidencies). Labor markets would be back to peak health. The Great Recession would truly and finally be over."

He then explain why that 5% promise was never to be. As Rick Moran quipped at American Thinker today, "What a magnificent exercise in self-delusion."

Also at the AEIdea blog, Mark Perry provides "a few factoids" from the report, e.g., he says that "Temporary hel employment increased in July to almost 2.7 million jobs, setting a new all-time record high for temporary and contract workers."

The last resource is an "issue brief," written by Salim Furth of the Heritage Foundation (No. 4005, August 2, 2013). Here's the takeaway:

"The Bureau of Labor Statistics employment report found steady but disappointing growth in the labor market in July. Employers added 162,000 net jobs, and the unemployment rate fell slightly to 7.4 percent. While this would be considered decent growth in normal economic times, it falls short of expectations for a recovery from a deep recession. However, part-time workers are not being converted to full-time at the rate seen in previous recessions."

Does anyone in the White House have the foggiest idea of how an economy works? As Silvio Canto, Jr., concluded at American Thinker on Thursday, "Our lackluster economy will continue because President Obama does not get it. He does not understand who creates jobs or how employers are motivated to create more of them."

UPDATE (8/4/13) An editorial posted on Friday, the editors of Investor's Business Daily opine that "young Americans" have been "left out of Obama's 'jobs recovery.'

"We keep hearing the job market is "improving" or even "solid," with 162,000 new positions created in July and unemployment falling to 7.4%, the lowest since 2008.

"But one group is sitting it out. And it's the one that most enthusiastically embraced Barack Obama in both of his presidential elections: America's young.

"Their unemployment rate is a shocking 16.1%. Increasingly, those ages 18 to 29, the so-called millennials, are being left out of the market, with tenuous or no ties to the workplace. Just 43.6% of this group have full-time jobs, according to Gallup.

"So what are they doing? As a new Pew Research report shows, many are just hanging around their parents' houses; 21.1 million young Americans live with their folks, more than ever.

Over at Power Line blog, Joe Malchow crunched some not-very-pretty numbers on youth labor-force participation. Participation among 18-to-19-year-olds has declined 11.3% since Obama took office. For those ages 20 to 24, it has dropped 3.4%.

The link for the Power Line blog entry referenced in the paragraph immediately above should be here.


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