August Jobs Report Worse Than Expected

One headline for the August jobs report today read, “US economy added 96,000 jobs in August and the unemployment rate fell to 8.1%”. Well that sounds pretty good, until you look deeper into the numbers to see what it really meant. Economists were expecting 125,000 new jobs in August which would have been much better. You see, in order for our employment rate to stay steady, our economy needs to be adding about 150,000 jobs per month due mostly to new people imigrating to our country. We were 54,000 jobs shy of that breakeven number. One might think that the unemployment rate should have increased since we didn’t meet the 125k job level. The reason the unemployment rate went down is because about 368,000 people who were previously looking for work decided to quit looking all together. That takes them out of the calculation for being unemployed. I’m not sure why they don’t count those people, but I guess the government assumes have retired and don’t need a job anymore. So the unemployment number went from 8.3% down to 8.1%, not really good news for anyone. Now our nations unemployment rate has been above 8% for 42 straight months. The jobs we did add in August were mostly jobs at restaurants and drinking places. Something tells me that those jobs probably don’t pay as much as most people would like to earn, but at least it’s a job. To pour some more salt in the wound, average hourly earnings for those employed in our country went down a little bit. And finally, the employment numbers for June and July were both revised to a lower number than had previously been reported. For the year 2012, we’ve been adding and average of 139,000 jobs per month, compared to 153,000 per month in 2011.

I guess the good news is that we are adding jobs right now instead of losing jobs.  And, we’ve been averaging 139,000 new jobs per month so far this year, which is not too far off our breakeven number.  Hopefully things will continue to go in a positive direction, and go a little quicker.  Our nation needs to get people back to work!

2 Responses

  1. Gordon Graves

    Interestingly, I recall in 2008 you mentioned, and I paraphrase, when the stock market started back up that “historically it would stop and go back down and test that bottom”. Your concern, at the time, was that the stimulus might artificially hold it up, which I believe it did. Also, we never really fixed the housing market problem, though Congress made a feeble attempt (Fannie & Freddie). Then there was the bank and auto industry bail outs. Constitutionality aside, the government is still in the auto business to the tune of $25 billion+ with little talk of repayment happening any time soon. Banks?
    During the DNC President Clinton compared our situation to the recession he and Congress worked through. What he didn’t mention was that it was followed by another, was it not? Testing the bottom?
    Following the great depression, there was a recession, 1937 I believe; testing the bottom? We had a gold standard then; how much of the New Deal spending was borrowed money?
    Many economists are saying there will be another recession in 2013, maybe even starting in 2012; testing the bottom? Our monetary standard now is paper, which some nations are already in discussions about changing; are we involved? The Fed is ready to print more. What will that do the value of our paper (dollar)? We are now borrowing what, 30% to 40% of what we are spending? How much lower can the dollar go before creditors (China) stop loaning, or worse call in the debt? Our nations credit rating seems somehow related to what ever Congress is willing to let the debt ceiling go to? This recession has lasted as long as the depression with unemployment among other things flat.
    There will be another recession. Do we really think we can print and borrow enough to keep from finding the bottom this time? Me thinks our national pride boarding on arrogance? Our just desserts may just be in the form of humble pie.

    • Thanks for the comments Gordon. We can’t keep borrowing and spending like we have been as a country. When the spending slows, and the taxes go up, it will only slow the economy down more from it’s current turtle pace. If we don’t fix our country’s financial problems, there will come a day when China and Japan don’t want to own our Treasuries any more…and then who will buy them? I guess we’ll just keep printing new money and buy them from ourselves?? That’s when interest rates go up, and the dollar goes down. Hopefully Washington DC can fix this before that happens.

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