The Bureau of Labor Statistics has released its employment report for December, 2010:
The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality and in health care but was little changed in other major industries.
Good news, eh? There’s more. The broader U-6 measure fell, too, from 17% to 16.7%.
Riddle me this. How can the U-3 unemployment rate fall sharply, the U-6 unemployment rate fall sharply, the number of long-term unemployed remain essentially the same and the economy only create 100K jobs? Inquiring minds want to know.
I can only speculate that the BLS is jiggering the business birth/death ratio. But I’m open to other ideas.
While today’s unemployment number came at a low 9.4%, well below expectations, the one and only reason for this is that the labor force in America has plunged to a fresh 25 year low. Assuming a reversion to the mean in the long-term average participation rate back to 66%, means that the civilian labor force, which in December came at 153,690, a drop of 260,000 from November, is in reality 157.6 million, a delta of 3.91 million currently unaccounted for. Maybe someone can ask Bernanke during his imminent presentation before Congress what happened to the unemployed population, which would have been 18.4 million if this labor force delta was incorporated, resulting in an unemployment rate of 11.7%.