The Labor Department announced this morning that the unemployment rate has fallen to 9% and the number of jobs added for January is 36,000.
This apparent contradiction is almost like saying you got a raise, but your paycheck is smaller.
When you consider that the government looks at 130 million people working but only samples a few companies for results, how can the data be accurate? Add to that the lack of information on how many people just stopped looking for a job or could no longer get unemployment checks because their 99 weeks ran out and the results seem dubious.
Economist Diana Swonk said on CNBC this morning that in Michigan the unemployment rate fell from 15% to 12%, but that was almost all attributed to people giving up and not looking. Similarly, this could be the explanation for the apparent good number in the face of very few hirings.
Others commented that the Bureau of Labor Statistics usually does its worst reporting in January because so many things like weather, holiday sales and other factors distort the true number.
Tea Party initiator Rick Santelli guffawed at the 9.0% number. “There’s very little evidence about why we should ignore price appreciation; there’s very little information that quantitative easing and fed monetary policy is going to create jobs, but yet you have overwhelming evidence that the jobs market is disappointing and all of you are trying to look for that one half a spaghetti in a 50 pound spaghetti bowl. This is not great data and 15.1 is probably the unemployment rate. (Fellow panelist ) Steve (Liesman) you and I both know that the unemployment rate, the labor force moving in and out, those giving up is really probably your best statistical reason for the drop to 9.0.”
It does seem odd that the unemployment number has gone down almost a percentage point in two months. Gallup’s most recent survey yesterday estimated unmployment at 9.8% and underemployment at 18.9%.
If there is an increased optimism in business it probably correlates more to the Republican takeover of the House and the deal to keep the Bush tax cuts than any Obama policies. Since Obama would be the one who benefits most from the jiggered data one wonders what is really going on at the Labor Department.