On Friday, the Bureau of Labor Statistics reported that the unemployment rate fell from 8.1 percent to 7.8, which sounds like moderately good news, except that this result doesn’t track with the fact that the economy added only 114,000 jobs in September. James Pethokoukis points to some broader metrics indicating what’s really going on here:
Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs. […] The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market. […] The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. […] [E]ven the artificially depressed 7.8% unemployment rate is way above the 5.6% unemployment rate the White House predicted for September 2012 if Congress passed the $800 billion stimulus package back in 2009. […] The 114,000 jobs created would have been a good number … but for 1962, not 2012. The
U.S.economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project. [AEIdeas, October 5] U.S.