Unemployment Seeps To 5.7%

The light in the American economy grew murkier in July. Real wages remain stuck in a fetid mire, up only 2.8% from a year ago, while methanous pockets of inflation bubble floated above to 5%. Rubbing up against declining consumer spending, the economy shed 51,000 jobs in July. The unemployment rate slinked up to 5.7%, a four-year high. However, that was 24,000 fewer jobs slithering away than economists, licking their lips and blinking their eyes, expected.

Jobless Rate Climbs to 5.7% as 51,000 Jobs Lost in July [NYT] (Photo: Getty)

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  1. anatak says:

    Yeah, and the GDP grew by nearly 2%, Mr. Doom and Gloom.

    In related news, Gas prices are DOWN!

    Damn this recession

  2. PunditGuy says:

    The economy is clearly not in a good place, but I think we can officially stop talking about a recession now.

    As for “Doom and Gloom” — think about what a rising GDP means in light of the jobs, wage and inflation numbers: People are doing more work to make up for lost coworkers, and they’re falling farther behind while doing it. I’m glad Mr. Sunshine is on your shoulder, but don’t discount what others are going through.

  3. Bladefist says:

    @anatak: Yes. The GDP continues to grow. 2% is an adjusted rate as well. 2% isn’t half bad.

    [consumerist.com] said it best, the hypocrisy is getting out of control.

    Companies post profits, people are mad, companies don’t post profits, thousands are laid off, and people are mad. It gives me a headache.

  4. Morac says:

    A 5% rate means that 1 out of every 20 Americans is unemployed, but the official unemployment rate is much lower than the actual unemployment rate since it doesn’t count people who’ve given up trying to find a job or those who took temp positions. Once you factor that in, the rate becomes 10.3% which is a little more than 1 in 10 Americans.

    Those still employed are most likely making “less” money than last year because of inflation and economists are predicting things won’t get better until the end 2009.

  5. Fivetop says:

    It’s like stagflation again. If they calculated unemployment the way they did in the seventies that 5.7% would probably double.

  6. timmus says:

    It’s rather misleading to sling around unemployment numbers when the metrics and methods have been fudged over the past several years. Just because the mass media is hoodwinked into accepting these numbers doesn’t make it correct. Unfortunately I have no idea where else to get this data.

    Maybe we need a private sector company to gather and compile this data. Oh never mind, I’m sure the board of directors of such a company will end up in bed with various senators and executive branch officials.

  7. Bladefist says:

    @timmus: This could be the fudged data you’re talking about, but here are the details:

    [www.bls.gov]

  8. Squeezer99 says:

    @Morac:

    let’s not forget it wsas bill clinton who decided to change the way how unemployment is counted

  9. Ein2015 says:

    Up-to-date numbers from the Bureau of Labor Statistics (always kept up-to-date by this link): [www.bls.gov]

  10. Erwos says:

    @Morac: That’s because you’re using unemployed in the colloquial sense. To an economist, it means something else… like the number being computed. People who aren’t interested in participating in the labor force (eg, people who have “given up”, which isn’t just discouraged job hunters!) shouldn’t be measured as though they were part of it.

    And I hear frequent talk about how Europe calculates it differently than us, yet I’ve never seen any proof of it, nor did I ever hear of it when I took labor economics in college. In fact, if you look at the Wikipedia page and do some research on ILO’s unemployment measurement standards, you’d find out that there’s no substantial difference:
    [en.wikipedia.org]

    Even in Europe, you have to have looked for work in the past month.

  11. mc101 says:

    Let us also not forget that real wages are down, yet again, food prices continue to climb, the housing and auto markets are in the crapper, fewer and fewer people have health insurance, and millions of people are losing their homes. No recession there, no sir..

  12. Erwos says:

    @mc101: A recession is when the national economy contracts. It is not necessarily related to any of the things you’ve mentioned.

  13. ARP says:

    @Squeezer99: Did Bush change it back? Bush’s folks have been removing fuel prices from the cost of inflation. Both presidents have fudged with unemployment definitions. Bush doesn’t count discouraged workers- workers who’ve been out of work for more than 9 months, I believe. Nobody measures underemployment, so a college professor working at Wal-Mart is happily employed.

    @Bladefist: GDP is only one indicator of economic health. It means we’re pushing out more crap. It doesn’t factor how many people it takes to make it, what they’re paid, inflation, economic disparity (e.g. wealthy making lots more money, poor losing money), etc. It’s like saying the South won the Civil War because it killed more Northern troops. It’s an indicator.

  14. Erwos says:

    @ARP: First of all, Bush didn’t remove energy and food from CPI. That’s how it’s been calculated for a long time (forever?), certainly before Bush’s time.

    Second, you’re right. You can not be in a recession and still have stagnant/falling standards of living. People need to stop tossing around the recession word, because it’s simply not the right one to use. “Inflation” is what you’re looking for.

    Third, no one counts discouraged workers. If you think Europe does, you’re wrong. Check the Wikipedia link I posted above for more info.

  15. ARP says:

    @Erwos: That’s the problem with the measure. It’s a single indicator without context or any detail of what’s happening to the vast majority of people. It’s a top-level number that can show net positive growth, even though most are economically losing ground (like now).

    Politicians use this to their advantage and claim that those who complain about the economy are doom and gloom, “because look, GDP is up.” But if only a tiny percentage of people, sectors, etc. are gaining in large amounts, then its not a recession on paper, but it sure is a recession in reality.

  16. mc101 says:

    @Erwos: I get that, but the so-called growth we’re experiencing doesn’t mean squat to the average American whose income, wealth, and benefits are receding…

  17. Erwos says:

    @ARP: So, invent your own inflation measurement. Seriously. But, remember that energy prices filter back down into everything else eventually. When you consider that, CPI isn’t as bad as some people make it out to be. There really is a risk to overstating inflation, as any economist could tell you (Google for “inflationary expectations”).

    And, again, you keep misusing this recession word. Recession has a specific meaning, and that meaning is not “times are tough” or “some sectors are taking a pounding”. What we’re going through is energy-driven inflation combined with a credit crunch, not a recession. Times are indeed tough, no doubt about it, but it’s _not a recession_.

  18. Bladefist says:

    @ARP: You’re completely right. It’s an indicator. But, its the indicator most widely used. Its one the average guy can understand. We use it to declare a recession, so we should use it to declare prosperity.

    You of course can dig deeper. I don’t think there is any argument that there more harsh times coming in specific industries. But overall, we look okay.

    Still the richest large country, at around 40k per capita

  19. Erwos says:

    @mc101: Great. Invent a new word that actually describes the situation. Or, better yet, just say “real wages are stagnating/lowering, causing a drop in the standard of living”. Sounds pretty bad to me.

  20. TouchMyMonkey says:

    @anatak: @Bladefist: You can put all the lipstick on this pig you want, but it’s still a pig. Yes, gas is down, but by how much? Enough to really feel any relief in your budget? Probably not. Yes, $125 oil is better than $145 oil, but that’s not relevant to the issue at hand, which is craptastic economic performance in general, in spite of the government spending money like drunken sailors. With all the money being borrowed and wasted…er…spent on Iraq, you’d think the economy would be running white hot and that we’d be at full employment. That this is not the case is testimony that something is seriously wrong, and denying it doesn’t help.

  21. Morac says:

    @Erwos:

    Just because someone has “given up” looking for a job, doesn’t mean that person doesn’t want a job. It just means that the person hasn’t been able to find one and stopped looking. This could be permanent (such as early retirement) or temporary (going on welfare).

    Also official the figures don’t count people who are forced to take part-time positions. So if you have people with higher level degrees working part time at McDonald’s because they can’t find work in their field, they are still considered “employed”.

    This is why the numbers are misleading.

  22. ARP says:

    @Bladefist: Yes, but I guess I have a problem with the status quo (that’s what we’ve done, so that’s what we should do). Perhaps we can create a meta-economic indicator- the ARP index :) -that attempts to capture more economic indicators. You still have the “balancing” problem but you partially account for that. For example:

    GDP: X%
    Unemployment and underemployment: X%
    Mean (Average?) adjusted (adjusted agains historic wages) wages: X%
    Productivity: X%
    Interest rates: X%
    CPI: X%

    We’d have to reconstruct most of these measures because polticians (both sides) have been messing with them to spin positive results (e.g. fuel and food not in CPI).

  23. Jevia says:

    How do they know when someone has “given up” looking for a job anyway? is it strictly time-based, i.e. at the end of your unemployment benefits, you’ve automatically “given up?”

  24. ARP says:

    @Erwos: I don’t think I misunderstand it. I get that “on paper” we are not in a recession. I 100% admit we do not meet the textbook definition of recession. I’m saying its BS that economists and politicians say “GDP is up, we’re fine” when all the other economic realities “on the ground” seem to indicate otherwise and fail to address that reality because of their need to spin that they didn’t f*ck things up.

    It’s like the Iraq war (Yes, I did go there). People say we won the war (McCain we won the war and we’re winning the war in the same sentence) because violence in certain areas is down. That’s a very narrow definition of sucess, when there are so many other factors in play (political reconciliation, employment, reconstruction, basic utilities, human rights, etc.) that show a broader definition of sucess.

    So, I’m saying don’t expand GDP to mean more than it is or to placate us that everything is fine.

  25. Bladefist says:

    @ARP: We could model it off our post-9/11 security index. Give it colors. lol

    Either way, status quo, or not, you’re not going to be told the truth, especially near election day.

  26. am84 says:

    My boyfriend and 20 of his co-workers unexpectedly lost their jobs early this month. If not for unemployment, I don’t know how we would pay rent or any of our bills.

  27. puddleglum411 says:

    @am84: I recommend your boyfriend start keeping 3 months expenses in a savings account or CDs. But I suppose that is the old fashioned way. These days we expect our rainy day fund to come out of the pockets of our fellow citizens.

  28. incognit000 says:

    I think that the rising GDP in the face of everything else falling indicates that someone is jiggering the numbers.

    Every administration has looked to drive GDP up and employment and inflation down, and of course the best way to do that is to tinker with things until you make the numbers look good.

    I still say any good news reflected in this is purely the result of clever re-labeling and re-calculating, and any bad news is at least partially mitigated by lying about it.

  29. Pro-Pain says:

    Screw jobs. Work sucks and the stupid morons (people) you have to deal with at a job suck even more anyway. I’d rather sit @ home all day and take painkillers and play guitar! I’d vote Bush in a 3rd time if I could…God Bless America.

  30. legwork says:

    I agree “recession” isn’t the right word, but that doesn’t mean things can’t be perfectly screwed up.

    Food and energy (including gasoline) are part of CPI, they just aren’t in “core cpi” that some idiot talking heads use to appease their bosses (who need to appease their advertisers).

    Also, hedonizing (???) of the numbers is the recent change that screws up the validity of CPI. i.e. Your gas cost 20% more but you somehow got 20% more enjoyment out of driving, so net inflation = 0%. At some point though, ($2 to $4 gasoline within 3yrs) that bondo won’t stick, so in spite of brave efforts it started to heavily affect CPI.

    Trust the visible effects more than “official” summary numbers like CPI. Whatever our best & brightest have to report will always be spun to look rosy.

    @Bladefist: Either way, status quo, or not, you’re not going to be told the truth, especially near election day.

    Bingo.

  31. steininger says:

    @Erwos: I’m not sure you read this article correctly. Real wages are up 2.8% not down, up. Regardless of they way you cut that it’s a good thing. Sure it would be great if real wages were up 5% but still your average American can purchase 2.8% more stuff now than they could a year ago and that’s taking into account the dramatic increase in prices. Yeah there are pockets of people out there who are doing pretty bad, but even in the times of greatest prosperity in this country there have been groups and industries doing terribly.

    @ARP: So I know your not the only one who was saying this, but seriously politicians cant really mess with numbers like GDP or Unemployment. They don’t have any control over how these things are counted, well with the exception of China who includes sales of Real Estate in GDP to make it look like their economy is doing better than it is. But Politicians don’t have any control over the metrics. They have been in place for a long long time and the only times they ever need to be reevaluated is in times when economies undergo massive change, such as switching from the gold standard to fiat money.

    If politicians could mess with these numbers on a year to year basis then there would be no way for Economists to conduct historical research or put current situations in the context of prior experience. You would have no way to compare the unemployment rate from this year to that of last year if there wasn’t consistency in the measure.

  32. Carencey says:

    @steininger: Not quite. I am not sure if the term “real wages” was applied correctly in the summary, but per the article, if wages increase 2.8%, and inflation is 4%, then people can purchase less than last year. (The article says “wages”, not “real wages”.)

    @ARP: Might I suggest that you use median for your average rather than mean? Median is more reflective of the population as a whole, while mean can be skewed by a small number of people making a lot more money.