Diary

The Economic Tailspin Continues

The unemployment report for July 2009 was released this morning by the Bureau of Labor Statistics. Unemployment was down slightly to 9.4%. As was to be expected, the Administration and its allies in the media have begun to crow that this is a sign that porkulus is, in fact, working:

WASHINGTON (Reuters) – 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.

Oddly enough, under the heading of “MOSTLY GOOD NEWS” they have these factoids:

[U]nemployment remains stubbornly high, meaning households have less income to spend.

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.

Manufacturing employment fell by 52,000 — the first time since September losses were less than 100,000 — after shrinking by 131,000 in June.

In the service-providing sector, 119,000 workers were laid off, and the goods-producing industries purged 128,000 positions.

If this is “mostly good news” you can imagine the bad news is at least that good.


To the extent that there was any good news in the report is driven by a lot of negative factors.

Fewer people are actively looking for work, therefore they no longer count against unemployment numbers.

And economists cautioned that the unemployment rate had only declined because 400,000 people gave up their search for work and left the labor force. The White House and economic forecasters still expect unemployment to reach 10 percent or more before it begins to fall.

Huge job losses in the manufacturing industry prevented additional unemployment.

Manufacturing employment fell by 52,000 — the first time since September losses were less than 100,000 — after shrinking by 131,000 in June. This was probably due to the reopening of General Motors and Chrysler assembly plants after bankruptcy closures.

“Because layoffs in auto manufacturing already had been so large, fewer workers than usual were laid off for seasonal shutdowns in July,” Labor Commissioner Keith Hall said, adding that the seasonally adjusted gain did not indicate an improvement in the industry.

In every sector of the economy, except those government, education, and health care continued to shed jobs. Two of these three industries are funded by tax dollars and the third is heavily dependent upon public funding. A cynic might note that they vote Democrat, too.

So, how is that Hope ‘n Change working out for you? I thought I’d see how this Obama  Recession looks today compared to situation when Obama was coronated back in January using BLS press releases as my tool.

In January, 21% of all unemployed persons had been out of work for 27 or more weeks. Today the number is 32.5%. The ranks of the long term unemployed, though, has been reduced by adding 62,000 persons to the rolls of those who aren’t even bothering to look for work raising the total to 796,000. Another 1.5 million were out of work but hadn’t looked for a job in the past 4 weeks. This means they will eventually become part of another positive report for the administration as they, too, stop being counted.

There are over a million more persons, 8.8 million, than in January who are working part time because they can’t find full time work.

No matter how the administration spins this report the fact remains that any marginal reduction in the rate of unemployment reflects either an accounting gimmick, like not counting the long term unemployed, or via public sector employment. Neither of those are indicators of anything turning around and, to the contrary, they indicate we have a long way to go before we hit rock bottom.