The BLS reports that unemployment dropped to 8.5%, from 8.7% (November's unemployment numbers were "revised" upwards to 8.7%). Based on the issues raised in the last post, what can we make of the numbers reported?
Not Seasonally Adjusted
Labor Force: -310,000
So, we had a net loss of 389,000 jobs in December (not unexpected, due to temporary holiday employment ending), of which 79,000 are still looking for work, and 310,000 are no longer looking for work. Meanwhile, we tacked on 143,000 new people. According to the "unadjusted" numbers, unemployment actually went up by 0.1%.
Note that the above numbers represent the real statistics as collected by the BLS. As we noted previously, however, employment throughout the year is cyclical. For example, people are hired for temporary jobs during the holidays and are then let go after. That is, unemployment naturally decreases during the holidays and then increases afterwards. Some people find this cycle to be unsatisfactory for reporting purposes, and so the BLS "seasonally adjusts" the data by comparing it to historical trends. Here are this month's "adjusted" numbers:
Labor Force: -50,000
Quite the swing! You might say that these adjusted numbers tell us that we lost 176,000 fewer jobs than we expected to lose at this time of year. While that's valuable to know, I would argue against the headlines that we will no doubt read saying "Unemployment has gone down!". Instead, they should say "Unemployment has gone up, but less than would be expected based on historical trends!".
I guess that isn't as easy to fit on a page, though.
Even in the seasonally adjusted data, the trend is still towards a declining labor force. If the economy is going to truly pick up, this number has turn around dramatically. The numbers show us that since December of 2010, the labor force has only increased by 217,000 people. If January follows the trend of the last two months, we could actually have less people in the labor force now than a year ago, even though we have since added 1.695 million people to our population!
Also, last month it was noted that well over 99% of those dropping out of the labor force were women. This month, the numbers are -61,000 for men (19.7%), and -249,000 for women (80.3%), so the trend continues, albeit not as strongly.