Understanding The Good Economic News

Unemployment claims slowed down this month - GREAT!!!  That's good news, to be sure:

U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August, according to data on Friday that provided the clearest evidence yet that the economy was turning around.

With fewer workers being laid off, the unemployment rate eased to 9.4 percent in July from 9.5 percent the prior month, Labor Department data showed, the first time the jobless rate had fallen since April 2008.

But...don't believe the hype of suddenly being out of the recession, or of experiencing 'recovery'.  Dig a little deeper to understand what the numbers really mean:

While employers cut fewer jobs than forecast in July, unemployment remains stubbornly high, meaning households have less income to spend. This could set the economy for an anemic recovery, analysts say.

Moreover, in July the workforce fell by 422,000, far more than the 155,000 decline in June, suggesting jobless workers may have given up looking for new work.

Since the start of the recession in December 2007, the economy has shed 6.7 million jobs, the department said, adding that the number of long-term unemployed continues to rise.

Job losses in July were spread across all sectors, but the pace of firings slowed markedly from previous months.

Slublog via Ace of Spade boils it down: "Basically, unemployment went down because the rate of layoffs slowed; employment did not increase. People are not getting hired, they're just getting fired in lesser numbers."

He also reports on an interesting component of jobs numbers that I haven't seen before:

Back in 2004, when unemployment was 5.6%, Reuters looked more deeply into the numbers and produced this story: "Low US Jobless Rate ignores 'Hidden Unemployed'"

A key reason the official U.S. unemployment rate is so low is the growing number of working-age people leaving the labor force, outplacement firm Challenger, Gray & Christmas said on Thursday.

This trend was first reported exclusively by Reuters on Monday in a study of little-known figures buried inside the U.S. employment report each month.

The Bureau of Labor Statistics, which produces the data, also publishes an alternative measure that tries to capture the hidden unemployed, those who are not included in the official unemployment rate for various statistical reasons, Reuters reported.

So, using the analysis so helpfully provided by the media when Bush was president, Jim Geragthy looks at the real unemployment rate:

In July, 796,000 of those were taken out of their definition of the workforce, and thus their unemployment calculations for this month, because they have stopped looking for work "because they believe no jobs are available for them..."

...In a work force of July's number of 154,504,000, that's an unemployment rate of 9.9 percent.

In a work for of June's number of 154,926,000, that's an unemployment rate of 9.8 percent.

I haven't seen this sort of in-depth analysis performed on the jobless numbers since...oh...January of this year. The discouraged worker is now the forgotten worker.

The Reuters Unemployment News Formula:
Low unemployment + Republican President = Hidden bad economic news.
High unemployment + Democrat President = Economic recovery.

Not exactly a recession-buster now, is it?  Hot Air adds this summary to the numbers:

Having the upward trajectory of joblessness slow down does not make a recovery.  As Winston Churchill reminded the British after the miracle of Dunkirk, wars do not get won by successful evacuations.  Until the economy starts generating a net increase in jobs and not just a lower net decrease, the overall employment rate will creep upwards.  The only way for that to happen is to get capital into the markets to create jobs.  The stock market has shown some indications lately that capital may finally be getting off the sidelines, but it won't jump fully back into play as long as the Obama administration insists on pursuing policies hostile to business.

Unfortunately, that's exactly what he's doing.  Obamacare, cap-and-tax, tax increases, and more stimuli are all going to continue punishing the productive and successful, spreading the wealth to the unproductive and unsuccessful on the basis of political favor rather than market forces.  That's why we must stop his radical Leftist agenda from proceeding forward.

While any sign of improvement is great, what we really need are signs of improvement that address the root causes of market prosperity - government getting out of the way of businesses, and letting Americans do what they do best.  Until then, it's all peripheral, and mostly a big spin game.

There's my two cents.