Just as it’s (counterintuitively) good news when the jobs-added numbers and the unemployment figures go up (more people looking for work in an improved economy), the opposite is true as well:
A brutal unemployment report this month. Payrolls dropped by 125,000. In another one of those unwanted lessons in how we calculate unemployment data, the unemployment rate dropped from 9.7 percent to 9.5 percent — but not because people got hired. Instead, 652,000 people gave up and stopped looking for work. And that number might be higher than it looks, as the natural monthly growth in the labor force is about 100,000 — so to see a 652,000-person drop might mean something like 752,000 current workers left as 100,000 new workers entered.
This is the textbook economics reason why we need that extension of unemployment benefits:
Nevertheless, one can only hope that this report makes it abundantly clear to policymakers in Washington that more investment in job creation is necessary. Cutting spending and focusing on deficit reduction, as Republicans demand, may prove disastrous.
Unfortunately, as Annie Lowry points out, the White House is being way too upbeat about these latest numbers, which may be an indication that they are not prepared to continue fighting for more stimulus legislation.
Brad DeLong sees too much spin, not enough reality:
Employment has to rise by roughly 130K a month to keep even with labor force growth and keep the labor market from declining further. 600K in six months doesn’t make it.
Obama should be saying that his policies have helped stop the economic decline. He should not be saying that the state of the business cycle is “improving.” Even more so, he should not believe and act on a belief that the state of the business cycle is “improving.” It ain’t so[.]