Rachel Maddow, Obama, Krugman and others will champion the drop in the unemployment rate.
However, Bernake, and I both know the number that matters is getting dramatically worse.
Why is wall street trading on the wrong number?
That number?
There was still a net increase in jobs. More importantly, the increase was greater than projections. Also, when positive numbers like this come out, the counter scenario (underperforming expectations) becomes no longer a possibility. So, positive market reaction is appropriate.
With that being said, the *trend* of declining labor force participation is potentially problematic. In the long term, this means individual productivity must keep increasing to maintain the same level of overall productivity. So either people need to do more work, or use things like technology to become more productive…
why is wall street so amped on the unemployment number? It being obviously flawed.
thanks
Does the labor force number include people in retirement? The only qualifier I saw was that it was for people 16 and older.
it’s not adjusted for baby boomers retiring
If you retire, you drop out of working, But you also drop out of job hunting. So you are removed from the statistic
The drop in unemployment matters because it affects sentiment. I was waiting to see whether to move into equities or bonds (yields have been dropping and bond momentum has been above equity, although both positive) and I think that this will lead me into equities, purely because of sentiment.
The direction is the most important thing, and we are starting to see a trend to this drop in unemployment.
So it’s just a blanket number of people over 16 that have a job? If that’s the case then i would expect to see a big drop in participation in the next few years.
Basically 36% of population elects to not work, but how much of that number is made up of people under 16 or in retirement? A good number to measure is the labor force participation rate for individuals of working age.
I’d forgotten enough to need to look it up again, but Wikipedia says that the denominator of the labor force participation rate equation excludes people over 65. So although retirement does take you out of the participating labor force, it does not necessarily take you out of the “working age population” unless you are over 65. So all those retired hedge fund managers are still counted as part of the labor force, provided that they’re not too old.
Not sure what happens as more and more people over 65 decide to work because they can’t afford to retire. They are probably excluded from the denominator because that is taken (I believe) from census data. Whether that means they are eliminated also from the numerator because they are over 65 or included because they are working is something I don’t know (maybe someone else here does). Certainly in the past, this was considered an insignificant number, but that may not be the case anymore as more and more people remain in good enough health to work, and become financially obliged to continue working.
Here’s the link:
http://en.wikipedia.org/wiki/Labor_force
http://economics.about.com/od/unemploymentrate/f/labor_force.htm
oops. sorry for misinformation.
I doubt all 36% of folk are “electing” not to work. If that were the case, wages would have to be rising quickly in order to have any net creation of any jobs at all. This report shows a decline in labor force participation, but there still is a net positive creation of jobs in pretty much all sectors except the public sector.
However, in that case, the unemployment number is dropping because labor participation rate is dropping?
drop in unemployment only good if labor participation is stable or increasing?
If the trend is a drop in unemployment and drop in participation, is that really a good trend?
Not all of the employment rate increase is from declines in the denominator. The numerator has risen too, which means that - had the participation rate stayed constant - we’d still see an increase in employment, it’d just be a smaller percentage increase in the number employed.
Conclusion, this is not a bad thing, but it’s not nearly as good as it looks on the surface.
Still think it’s a total poop-filled number. Need another 3-4 months of +250k to actually get traction. And the structural gap has to be healed, meaning, appropriate jobs/careers for experience/skill/education/credentials.
Even the market today is actually starting to say, ‘hmmm…’
the current unemployment rate calculation is deeply flawed and misleading.
there is a massive population that wants to work full-time but can’t get the job. If you threw all these people in the pot, the jobless rate would probably be triple or more the “7.7 percent” officially quoted.
Give up in searching, Get old, Take a bullsh*t time job to just get by, Back to school will all count you as no longer unemployed.
ZH nails about one article a day. This would be today’s:
http://www.zerohedge.com/news/2013-03-08/what-difference-jobs-12-trillion-debt-makes
Market starting to feel heavy, my palms are sweaty… might close negative for the day
I’m hearing differing things as to whether this number includes 65+
BLS doesn’t seem to tell us their calculation definiton.
anybody?
What would be the unemployment rate if we were still using the data from the early 90s before Clinton changed the metrics?