At CNN (and presumably other lamestream media outlets), they’re trumpeting the “great news” about the reduction in the unemployment rate from December’s 8.5% to 8.3% in January.
Meanwhile, the unemployment rate fell to 8.3%. That is the lowest since February 2009.
Hiring was much stronger than expected, and once it was apparent the job gains were broad based across several sectors, economists and investors called it a “nice surprise,” “fantastic,” and even “a touchdown!” Stocks climbed at the market open.
Yay! Hurrah! That’s great news. Love the Super Bowl weekend touchdown metaphor. Obama is leading us back from the precipice, or something. But wait – it’s all phony. The Bureau of Labor Statistics is basically ignoring the fact that the denominator in the unemployment equation got a lot smaller last month. The unemployment rate dropped because the labor force participation rate dropped to a 30 year low. (from ZeroHedge, his emphasis)
A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo:1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation.
Here are the charts:
