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The Unemployment Rate Magically Fell to 7.8%!

By JLP | October 5, 2012

From US jobless rate falls to 7.8 pct., 44-month low:

The U.S. unemployment rate fell to 7.8 percent last month, dropping below 8 percent for the first time in nearly four years. The rate declined because more people found work, a trend that could have an impact on undecided voters in the final month before the presidential election.

The Labor Department said Friday that employers added 114,000 jobs in September. The economy also created 86,000 more jobs in July and August than first estimated. Wages rose in September and more people started looking for work.

The revisions show employers added 146,000 jobs per month from July through September, up from 67,000 in the previous three months. The unemployment rate fell from 8.1 percent in August, matching its level in January 2009 when President Barack Obama took office.

Isn’t it amazing that ONE MONTH from the election, we’re seeing unemployment numbers at a 44-month low?

UPDATE: From the WSJ (bold mine):

The politically important unemployment rate fell to 7.8% last month from 8.1% in August. That was the lowest level since January 2009.

U.S. payrolls, obtained in a separate survey of employers, increased by a seasonally adjusted 114,000 jobs last month, the Labor Department said Friday.

Economists surveyed by Dow Jones Newswires expected a gain of 118,000 in payrolls and an 8.1% jobless rate.

So, the economy added 4,000 fewer jobs than were expected and yet the unemployment rate still fell .3%? Interesting…

More…

UPDATE #2: From the BLS report:

The change in total nonfarm payroll employment for July was revised from +141,000 to +181,000, and the change for August was revised from +96,000 to +142,000.

That’s a POSITIVE adustment of 28.4% for July and 47.9% for August.

Question: Why even release the survey if the numbers are that poor?

Topics: Business News, Economics, Politics | 23 Comments »


23 Responses to “The Unemployment Rate Magically Fell to 7.8%!”

  1. Steve Braun Says:
    October 5th, 2012 at 8:47 am

    This was as predictable as the sunrise.

    The bare fact remains that job growth is way too low and slow for the tens of millions that are still looking for work and those who have given up searching for work. Despite the appearance of good news with the unemployment rate falling, the more realistic underemployment rate remains absurdly high.

  2. JLP Says:
    October 5th, 2012 at 8:54 am

    I follow several supposedly “smart” people on Twitter who are all believing these numbers as legit. I’m appalled.

  3. clocks Says:
    October 5th, 2012 at 11:53 am

    Does anyone really believe these numbers anymore? I think every intelligent person in the country knows real unemployment/underemployment is far, far worse than what is being reported. There are 10s of millions less people working now than there were 4-5 years ago.

  4. LR Says:
    October 5th, 2012 at 12:56 pm

    as you copy from the WSJ, july + august employment numbers were revised upwards by 86,000 jobs.

    maybe you should have bolded that as well?

  5. JLP Says:
    October 5th, 2012 at 1:08 pm

    LR,

    86,000?

    And you don’t find that suspicious?

  6. Jack Says:
    October 5th, 2012 at 1:41 pm

    More people left the workforce last month — 180,000 — than there were new jobs.

  7. LR Says:
    October 5th, 2012 at 1:48 pm

    suspicious that someone is cooking the books?

    I can’t say that i understand how the calculations work that lead to these numbers, but I do know that there are levels of protection involved to keep the WH or other interested parties from tampering with the number.

    I believed the number when it was in the 9s, why not now?

  8. Jack Says:
    October 5th, 2012 at 2:31 pm

    Why not now? Because the number of jobs created last month was LOWER than the numbers created in each of the three prior months. So why would the unemployment rate drop NOW, when it did not THEN?

  9. Jack Says:
    October 5th, 2012 at 2:31 pm

    Why not now? Because the number of jobs created last month was LOWER than the numbers created in each of the three prior months. So why would the unemployment rate drop NOW, when it did not THEN?

  10. Jack Says:
    October 5th, 2012 at 2:33 pm

    BTW, it seems that in September, there were 582,000 more people working part-time jobs “for economic reasons.” In short, we did not create 114,000 jobs, we just split a bunch of full-time jobs into part-time jobs. They all count equally as a “job” for the unemployment number.

  11. BG Says:
    October 5th, 2012 at 6:03 pm

    I haven’t looked yet, but I hope the sceptics perform a statistical analysis showing that this isn’t on the trend line…

  12. Eugene Says:
    October 5th, 2012 at 6:51 pm

    I did some research, and I found that when the July and August numbers were revised to show more than expected, that caused the discrepancy between a lower than expected September jobs gain and the lower than expected unemployment rate. You also have to remember that all these numbers are estimates and are subject to revision for a few months.

  13. JLP Says:
    October 5th, 2012 at 6:59 pm

    Eugene,

    That is correct. July and August’s numbers were adjusted upward by something like 86,000, which is ridiculous.

  14. JLP Says:
    October 5th, 2012 at 7:08 pm

    From the BLS Report, which I linked to at the end of the post in Update #2:

    The change in total nonfarm payroll employment for July was revised from +141,000 to +181,000, and the change for August was revised from +96,000 to +142,000.

    That’s a POSITIVE adustment of 28.4% for July and 47.9% for August.

  15. BG Says:
    October 6th, 2012 at 8:10 am

    JLP) Percentages can get really large when dealing with relatively small numbers. You are talking a difference of 50,000 jobs out of tens of millions — I don’t like that these numbers are always subject to modification 1-2 months after the fact either. So trust the new July number, less faith in the new August number (but more faith in that number than you had last month), and take the current September number with a grain of salt (wait 1-2 months to see how it will be adjusted).

    Regardless the accuracy of these numbers should be commended if they are within +/- 50,000.

  16. Jack Says:
    October 6th, 2012 at 8:20 pm

    You’re right, BG. If this were a normal recovery, and we were seeing +400,000 per month, a +/- 50,000 would be irrelevant.

    But this so-called “recovery,” which is not even keeping up with the growth of the working-age population, is making these errors relatively large.

  17. BG Says:
    October 7th, 2012 at 9:16 am

    From a yahoo article:

    “Joel Naroff, president of Naroff Economic Advisors, said that it’s “not that unusual” for the rate to move by three-tenths of a percent in one month. It’s happened 12 times in the past 10 years.

    “In other words, at least once a year, you should expect that large a move,” he said in an email to clients. It last happened 20 months ago, “so we were overdue. That is just the reality of the data.”

  18. Jack Says:
    October 8th, 2012 at 7:53 am

    What a joke. It just HAPPENED to make that move the LAST report before the election? How stupid do they think we are?

    Oh, yeah. They think we’re too stupid to buy the right cars, light bulbs, or toilets; too stupid to save for our own retirement; too stupid to make our own healthcare decisions; and too stupid to give to the right charities. The young voters they think are too stupid to drink responsibly. And the female voters they think are too stupid to choose a good father for their children, too stupid to not get pregnant before they are married, and too stupid to negotiate fair wages for their work.

    Why would anyone want to vote for a party that thinks they are so stupid?

  19. Bridget Says:
    October 8th, 2012 at 9:29 am

    May I just say, I really like Jack’s comment.

  20. BG Says:
    October 8th, 2012 at 12:25 pm

    Jack finds these numbers incredulous because house republicans have been doing everything in their power to ensure this economy sucks. He can’t believe it is actually improving DESPITE their efforts.

  21. Jack Says:
    October 10th, 2012 at 3:55 pm

    Well, Rush Limbaugh did predict this back in March — that 0bama would magically get the number below 8% right before the election.

    Now, go look at the numbers, BG. Industry says it added 114,000 jobs, but somehow the Household survey says 800,000? Oh, and over 582,000 of those were part-time jobs.

  22. BG Says:
    October 11th, 2012 at 11:16 am

    Sounds like you care about some other metric than the U3 reported here. As with all statistics, you need to know what exactly is being measured before drawing conclusions.

  23. Jack Says:
    October 12th, 2012 at 10:32 am

    Absolutely, BG. The U3, as we see in a later post, is a very skewed number. If one has been out of work more than 52 weeks, one is not counted as part of the labor force, and is not part of the denominator in the U3 calculation.

    U3 is also skewed by their defining a “job” as ANY paid work. For example, as of Monday, I am out of full-time work. I was given two weeks notice at the beginning of the fiscal year because of reductions in the LOE on the project with the new fiscal year. So I will not longer have that six figure income. I will, however, be working about 3-4 hours a week for $40/hr teaching chess. That counts just the same as the six-figure job as far as the U3 calculation goes.

    All of those 582,000 new part-time jobs counts the same as full-time jobs do for the U3 calculation.

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