Unemployment “Drops” to 7.8%. Labor force participation holds near 63.5%, U6 holds steady at 14.7% (Updated, Statement from Paul Ryan)
UPDATED: “Today is a sad indictment of the diminished expectations under President Obama. Far too many Americans are still waiting for their chance in the Obama economy. For those able to find work this month, any job growth is welcome, but this number is once again well below what is needed for America to meet its economic potential. Two-thirds of those who found work took part-time jobs when they are actually seeking full-time ones. We should not have to settle for this new normal. This is not what a real recovery looks like. We need a real recovery, and Mitt Romney has the detailed plan and leadership to provide it.” – Paul Ryan
Jack Welch, the former CEO of General Electric, caused a stir after the numbers were released, tweeting “Unbelievable jobs numbers…these Chicago guys will do anything…can’t debate so change numbers.”
CNBC had questions as well:
Job growth remained tame in September, with the economy creating just 114,000 net new positions though the unemployment rate fell to 7.8 percent, the first time it has been below 8 percent in 43 months. The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number. The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions. On the air, CNBC seemed equally perplexed by the biggest one-time drop in the unemployment rate in 29 years!
Interesting. We should be celebrating the good news of an unemployment rate that drops below 8% for the first time in 4 years. If only we could believe it. All evidence is to the contrary. First, the number is derived with the help of revisions to July and August numbers. Second, the Labor force Participation rate and U6 (which accounts for the underemployed and those who have given up looking for jobs) have not moved. GDP of 1.3%. Wells Fargo reported factory orders dropped 5.3% in August. (http://www.realclearmarkets.com/blog/FactoryOrders_10042012.pdf. ) Then there is this from Gallop:
U.S. nongovernment workers reported worse job creation conditions in September than they have in any month since February. Gallup’s Job Creation Index score of +21 among nongovernment workers is down from +23 in August and a high of +25 in April. At the same time, the job creation climate within state and local government became even more positive, helping to sustain U.S. job creation nationally.
Complications abound in the current U.S. job creation picture. On the one hand, nongovernment-sector workers continue to report conditions as good as or better than those seen before the global economic collapse. At the same time, the situation has deteriorated in comparison with the previous six months.
State and local governments currently provide a bright spot, but it is unclear whether their hiring will continue at its current pace after the first months of a new fiscal year and as budget shortfalls remain a widespread issue. The federal government continues to be a drag on U.S. job creation, but with the U.S. deficit remaining a major source of concern for Americans and politicians alike, and the “fiscal cliff” looming, this is not likely to change anytime soon.
So, for my fellow Americans that have found jobs, I am truly happy. That said, I am in the Jack Welch camp. It feels like these guys are cooking the books. 4 years of unemployment above 8% the number magically falls below it the month before the election but none of the fundamentals improve. Call me skeptical.