Good news, everyone! Only 247,000 jobs were lost in July – and the unemployment rate dropped from 9.5% to 9.4%!
Those who have studied arithmetic may be counting their fingers, trying to figure that out. It takes 100,000 new jobs a month just to stay even with the flow of new entrants into the job market, so how can the unemployment rate have gone down?
The answer, of course, is a reduction in the size of the labor force. Some number of individuals substantially in excess of 347,000, it seems, are no longer looking for work – or so we are told, according to government surveys of households.
I have little to no confidence in the statistical analysis accounting for the reduction in the unemployment rate. Surveys? How many? Seems to me that, in earlier decades, people were considered "no longer actively looking for work" as soon as their unemployment benefits were exhausted. I don't recall hearing anything about a change in that accounting procedure.
Granted, plenty of those people must be pretty "discouraged workers" by now, but I still suspect most of them would accept a job if something decent were offered – which is to say, I suspect the labor force is substantially larger than we're being told.
Naturally, the drop from 9.5 to 9.4 will be good news to those who think economic activity is entirely a function of psychology – that "thinking positive" is all we need to emerge from the current morass. On the other hand, if a huge number of workers have fallen into such despair that they truly are no longer looking for work, "thinking positive" really presents some problems.