On the Unemployment Rate

Lots of people are squawking about the latest USA unemployment rate. As usual, they're missing the big picture. Let's take a look.

According to the Bureau of Labor Statistics (U.S. Department of Labor) which released the numbers:

Nonfarm payroll employment changed little in May (+69,000), and the unemployment rate was essentially unchanged at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction. Employment was little changed in most other major industries.

And here are the charts they published:

Figure 1: Unemployment rate, seasonally adjusted

Figure 2: Employment changes by month, seasonally adjusted

These are, as noted, seasonally adjusted. However, given the unusual nature of the current economy (compared with the last 50 years or so), I think it's quite plausible that the data they use for seasonal adjustment might be a bit off. That's certaintly consistent with the charts — it's hard to tell with so few data, but this spring looks a whole lot like last spring (but 0.8% lower).

In any case, the unemployment rate is clearly decreasing, and the little uptick (from 8.1% to 8.2%, rounded to one decimal place) is no cause for hysteria such as:

• “Markets tumble on weak unemployment report amid fear that U.S. recovery has stalled”
• “Romney says May jobs report is 'devastating news'”

Stepping back a bit further, the official unemployment number is an unreliable measure of the economy and the job creation numbers present a very incomplete picture of the workforce.

Stepping back even further (thanks, google!):

Figure 3: Unemployment rate since pre-recession

(the tic marks on the x-axis are at mid-year) and

Figure 4: Unemployment rate since 1980

(I added the red dot; that's when Obama took office, in case any of you want to blame him for any of the mess).

The economy is still shitty, but it's recovering, and this latest report doesn't contradict that. (It would be recovering faster if the stimulus was bigger, but that's another story.)