MAKING SENSE -- April 6, 2012 at 11:34 AM ET
Unemployment Rate Dips to 8.2% as 120,000 New Jobs Are Added in March
A job seeker holds a job application during the San Francisco Hirevent job fair last month. Photo by Justin Sullivan/Getty Images.
The online headlines sum up the just-released March unemployment numbers:
"Job Growth Loses Steam," announced the Wall Street Journal. "Employers Added 120,000 Jobs in March, Fewest in Five Months" is the way Bloomberg put it. Said the New York Times: "The United States economy added a relatively weak 120,000 jobs in March, compared with 240,000 in February." And from across the pond the Financial Times posted, laconically: "U.S. jobs growth slows in March."
It all adds up to what many not-so-secretly fear: "an indication," as the Journal put it, "that momentum could be slowing." In recent days, news reports have focused on fears of any end to further economic stimulus -- by the world's major governments or their central banks. While stock markets in the West are closed for Good Friday (and Passover*), bond and stock futures markets continue to trade. On Friday morning, there was a rush to U.S. Treasuries -- a sign of slowdown fears -- and U.S. stock futures were down 1 percent, back below 13,000 for the Dow Jones index.
The supposedly good news was the announcement that the official unemployment rate dropped in March from 8.3 percent to 8.2 percent. But a look at the numbers reveals that when surveyed in their homes, 30,000 fewer Americans reported to have a job in March than the month before. So how could the unemployment rate go down? Because more than 100,000 Americans vanished from the "civilian labor force." If more people drop out than lose jobs, the ratio of unemployed to workers sinks, and that's what appears to have happened in March. Or, as economist Peter Morici put it: "Unemployment rate fell to 8.2 percent, simply because 133,000 unemployed adults became discouraged and quit looking for work."
The other question you may have: How can 120,000 jobs have been added if fewer Americans said they were working? The unsatisfying but accurate answer is "statistical noise." There are two surveys: one of employers; the other, of workers. Both are based on samples from which the final numbers are projected -- "extrapolated." Then the Bureau of Labor Statistics performs a "seasonal adjustment." As a result, month-to-month unemployment comparisons are to be taken not just with the proverbial pinch of salt, but a shaker's worth.
Add up all the qualifications and asterisks to Friday's data, and the official unemployment rate didn't really drop and is still stratospheric for a recovery.
Unemployment data based on the U.S. non-institutionalized civilian labor force as compiled by the Bureau of Labor Statistics.
Regular readers know, however, that we rely on a broader jobless measure: our own inclusive count of all Americans looking for a full-time job, but either idled or are working part time, "U-7." Happily, it dropped to 16.55 percent in March from 16.85 percent, as more part-timers shifted to full-time work and fewer out-of-the-workforce Americans said they "want a job." These numbers were greater than the 100,000-plus folks who didn't look for a job in the past 12 months and were dropped from the labor force. But we include them in U-7.
U-7 bottom line: This marks the sixth consecutive monthly drop from a high of 18.41 percent in September 2011. When U-7 dropped for February, Baseline Scenario's Simon Johnson tweeted it as an especially positive sign.
@paulsolman; your U-7 employment picture is definitely encouraging - perhaps even more so than the standard metrics /SJ— Baseline Scenario (@baselinescene) March 10, 2012
*- This is a rare year in which Good Friday and Passover fall on the same day. Some may find this fitting in that Jesus' Last Supper, the basis for Communion, was, according to the Synoptic gospels (Mark, Mathew, Luke), the first Seder, which is being celebrated Friday night. The fact astonished my Indian cab driver in New York on Thursday, however. He had no idea that Jesus was Jewish.