A Better December Jobs Report? Wait, Revise That

The unemployment report for the month of November was just released and is better than expected with non-farm payrolls increasing by 146, 000 jobs and the overall unemployment rate dropping to 7.7%. Happy times are here again, right? Wait, revise that.

While many pundits in Washington and on Wall Street are more than welcome to go little further than the headline numbers, let’s go behind the curtain and look a little bit closer. What do we see? Ooh, what’s this on the very last line of the Bureau of Labor Statistics report . . .

The change in total nonfarm payroll employment for September was revised from +148,000 to +132,000, and the change for October was revised from +171,000 to +138,000.

Back out those 49, 000 jobs from this month’s report and we have a net add of 97,000 jobs for the month that is very much in line with projections. The three month average, post these revisions, is a rank mediocre gain of 138k jobs.

What else do we learn from this report? Why did the rate decline despite expectations that it would remain steady or perhaps tick up? 350,000 people actually left the labor force bringing the overall labor participation rate down once again to 63.6%. That’s not good folks.

As I have indicated previously, we could have an unemployment rate of 5%, the cheerleaders in Washington popping champagne, and be entering into a deeper recession. How so? If people continue to simply give up looking for work and exit the labor force. Just because these people are not counted when calculating the unemployment rate, does that mean they do not even exist?

For those in Washington in cute skirts shaking pom-poms, these “uncounted” might be an inconvenience to painting a picture of progress. In fact these “uncounted” are an indication of the massive structural problems in our economy.

Unless and until we acknowledge the root problems of why the long term unemployed remains so high and why so many people continue to exit the labor force, we will not craft the appropriate measures to address these  structural issues. Throwing money out the window and pretending it is a safety net would fall under the heading of “putting good money after bad.” Where should we start the discussion? Let’s start by addressing why ~50% of those in our urban schools are dropping out and then we can go from there.

Want to see how your area is doing? Utilize the Research Center at Education Week.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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