By: Jeffrey Klein
Examiner.com
Today, it was widely reported that although weekly first time jobless claims were 362,000, the U.S. Bureau of Labor Statistics reported that the private sector added 227,000 jobs–both of which were slightly higher than expected.
However, the back story is that the White House was expecting the unemployment rate to fall, as a result of the “significant” number of jobs created.
But, alas, this all important economic gauge of the economy–remained stubbornly frozen in place at 8.3 percent–about where it stood shortly after President Obama’s inauguration.
Why?
The short answer is that the “labor participation rate,” which is determined via telephone survey each month by the Bureau of Labor Statistics, climbed from 63.7 percent to 63.9 percent in February, increasing the denominator in the unemployment rate equation by a greater number that the jobs created.
As a bit of background, the rate was level at just over 66 percent during the summer of 2008.
But, at about the time Sen. Barack Obama won the Democrat Presidential nomination the rate quickly fell, into what would become a serious downward trend–falling to its’ lowest point of 63.7 percent in January 2012.
As the average length of unemployment jumped to 40 weeks, from just 16 weeks prior to the onset of the real estate and financial crisis, it is easy to understand why people could become discouraged enough to leave the labor pool.
Now, the February uptick to 63.9 is significant, and represents the other side of the proverbial “double-edged sword”–the exact opposite effect to that which had been causing the “magical,” systematic 20 basis-point (0.20) monthly decline in the unemployment rate beginning last September…even though no jobs were created in August.
Ironically, the increase in the number of people looking for work, thereby causing this “freeze” in the unemployment rate, is no doubt the direct result of the mainstream media having trumpeted “the second coming” of the long delayed “Recovery Summer” all over American airwaves for the past four months.
Although this gambit was obviously designed to float President Obama’s reelection bid, it also had the opposite impact–creating the hope of finding a precious job, among a legion of the long-term unemployed.
There is no single, greater motivator than hope.
And, I believe, these fine people are perhaps providing us with another priceless signal…
“The End of an Error.”
