Whenever the unemployment rate drops in this country, most of us take that number as face value and assume the country is getting better. However, when 368,000 Americans stop looking for work that drives down the percentage because they aren’t considered in the calculation.
No doubt the Democrats will use this “good news” as a rallying cry after their national convention as a reaffirmation of their polices. However, many respected financial publications aren’t as optimistic.
According to Bloomberg:
The jobless rate fell from 8.3 percent as 368,000 Americans left the labor force. Unemployment was forecast to hold at 8.3 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.4 percent.
Factory payrolls decreased by 15,000, compared with a survey forecast for a 10,000 increase, after a 23,000 gain in the previous month. Automakers cut 7,500 jobs last month.
Others are looking to pull back. Mountain View, California- based Google Inc. (GOOG) said on Aug. 13 it will cut about 4,000 positions at its Motorola Mobility Holdings Inc. unit, with about one-third of the reductions coming in the U.S. Printer maker Lexmark International Inc. (LXK) on Aug. 28 announced plans to eliminate 1,700 jobs globally.
Payroll gains slowed from an average 226,000 in the first quarter to 73,000 in the April to June period, before picking up in July. Before today’s report, data showed it had taken the U.S. three years to recover about half, or 4 million, of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.
The unemployment rate, derived from a separate Labor Department survey of households, has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948.
According to CNS News, the number of Americans whom the U.S. Department of Labor counted as “not in the civilian labor force” in August hit a record high of 88,921,000. A bad sign for economist who follow the market indicators. Several reports point to another possible stimulus and/or monetary easing from the Federal Reserve.