Don't believe hype about drop in unemployment claims

CBS News

COMMENTARY Unemployment claims dropped unexpectedly this week for a second week in a row. This, along with last month's lower unemployment rate, suggests the recovery is jobless no more. Don't break out the low-price champagne just yet, though. There are still serious problems around people finding work and Washington knows it.

This week saw initial claims for state unemployment benefits dropping 13,000 to a seasonally adjusted 348,000, according to Labor Department, the lowest since March 2008. This just means fewer people are losing their jobs.

However, the number of people continuing to collect jobless benefits dropped by 100,000 last week to 3.43 million, the fewest since August 2008. The continuing claims figure doesn't include workers receiving extended benefits under federal programs. That number has also shrunk recently. As of Jan. 28, those collecting emergency and extended payments decreased by about 22,800 to 3.48 million. This is one reason the national unemployment rate dropped to 8.3 percent last month.

Jobless claims drop to lowest level in 4 years

Another reason is that some of those who are no longer getting extended benefits have given up and are no longer counted as part of the work force. Even Fed Chair Ben Bernanke was forced to admit this. He told Congress last week, "It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work. There are also a lot of people who are either out of the labor force because they don't think they can find work."

By Mike Shedlock's count - which I trust - the labor force is smaller now than when the recession technically ended 2.5 years ago. In June 2009, the labor force was at 154,730,000 people; the current number is 154,395,000. Just looking at the demographics of the number of people entering the workforce and the number of people retiring that number should be close to 160,000,000.

In addition to people dropping out of the workforce there is the issue of "seasonally adjusting." I was going to crib from Charles Biderman on this, but why not just quote him:

The BLS each month reports two data series, but only one jobs number is reported by the media. Actual jobs outstanding, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments - made at the sole discretion of the Bureau of Labor Statistics economists that 2.9 million less jobs gets translated into 446,000 new seasonally adjusted jobs for January and December.

Some people have accused the Obama administration of skewing the numbers in its favor. It probably has, just like every other administration.

[bodoke77]

Unemployment figures have always been fictitious. Just like every other number that comes from Washington. Here in California the unemployment figures have been reported in the low teens for most of the last three years. Of course the government doesn't acknowledge the existence of all the undocumented workers who can't claim UI benefits. They're earning as much as American workers in many cases but claiming 8 exemptions and not filing tax returns. They've been laid off too. I'd venture to say no less than 1 for 1 with Americans in this county. That paints a completely different unemployment picture than the one the government has published.
If the democrats weren't in the White House coming up to the election, would we still be hearing all this wonderful news about the economy? Or would we be hearing about all the people losing their homes and equity to the banking cartel and the growing numbers of homeless families in the U.S.?
What we do know is that for $38,500 you could have had a pancake breakfast with the President this morning.

[secretsquare12]

"This is one reason the national unemployment rate dropped to 8.3 percent last month. ... Another reason is that some of those who are no longer getting extended benefits have given up and are no longer counted as part of the work force"

This is extremely misleading. People who are no longer getting extended benefits are absolutely still counted as part of the work force.

And the idea that people who need a job and lose their unemployment benefits just "give up" is highly questionable to me.

[dmfrushour]

It's great that these people think they want to believe this garbage. Fact of the matter is that so many of us don't even count into these numbers any more and have lost homes, businesses, jobs, everything. Most of the people that aren't being counted aren't working because they don't want to work, it's because there are no jobs. The jobs that are there, don't pay enough to live on. The jobs that are available do not pay near what the jobs that were lost did. Prices have all been inflated. Where does it stop? American's are being drowned by our own people!

[strent9811]

I`m impressed. Finally a National News agency is acting like journalists instead of lapdogs for Obama and the Socialists. Congrats!

[NeedsVacation]

Good article.


This is a crisis.

If we don't discuss the important facts then we are doing ourselves a disservice.
This report only suggest less people are losing their jobs.

It's not about unemployment applications, it's about new job production. The unemployment application numbers have to drop since hiring has been frozen for the past 4 years. Companies can't operate with any less employees.

If high school graduates double the number of newly created jobs every year, then where are we.

This is a recession, or with the facts will soon turn into one.

[jeannutson]

Aside the fact that poeple leaving the workforce entirely contributing to the fall in unemployment numbers,several factors show the economy is more fragile than thought and the drops don't matter much in evaluating the strengh of the economy which is expected to be hit more by Europe's crisis.

[rightbehind]

The job market is now once again an employees market. We need to get rid of the republican economic terrorist.

[Osprey4]

LOL! Good irony is so rare these days.

[ddaryl1]

Well things are booming in my neck of the Woods. There is definitely increased shopping activity locally, and our unemployment is low.

[jose_z1]

The Unemployment numbers that the media hypes are too LOW !!! We are not at 8.7% we are at about 10% unemployment!
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"Another reason is that some of those who are no longer getting extended benefits have given up and are no longer counted as part of the work force. Even Fed Chair Ben Bernanke was forced to admit this."
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[democracy8]

Which is the same way that Unemployment numbers have been calculated since Reagan changed the formula to make his numbers look better. This is not some trick that Obama is trying to play on you.

[thechooch1]

No good deed (or news) goes unpunished.

[rjriley5000]

Big business and our corporate owned representatives never do good deeds.

Even if everyone who wants to work could get a job we still have the biggest asset transfer since the depression to big banks and other other corporate crooks. I suspect that if the public actually understood the true scope of how robber barons have stole not only their current assets, but also future earnings, that we would have widespread rioting and the top dogs would be receiving the Mussolini treatment.