Unemployment rate drop looks good but really isn't
So..., what's next? The unemployment rate fell from 8.3% to 8.1% in August, but there's little reason to cheer. Despite the "look" of the declining unemployment figure, the monthly report contains bad news and worse news. The bad news is the meager 96,000 jobs created during the month. While most expected August numbers to decline a bit, analysts were predicting something like 120,000 jobs created. With just 96,000 jobs, the unemployment rate should have gone up. About 150,000 jobs a month need to be added just to keep pace with working-age population growth. The worse news is the reason the unemployment rate dropped. Many Americans - about 368,000 of them - simply stopped looking for work in August. The bulk of those who dropped out of the job market are young people, aged 16-24. We cannot attribute the decline to students heading back to school (as much as we might like to), because the statistics factor in those seasonal changes. This is a strong indicator that...