Why the Unemployment Numbers Are Better Than You Think

Filed under: News, The Economy

Last Tuesday's election, by most accounts, was a referendum on the state of the economy. The GOP took back the House and nearly regained the Senate by continually highlighting the lack of sustained economic progress under the policies enacted by President Obama and the Democratically controlled House and Senate. And despite lots of other economic signs heading in the right direction (ie: The Dow is back to pre-Wall Street crash highs), the only number anyone cares about is unemployment.

It's obviously difficult to talk about the economy improving when 9.6% of Americans aren't working, but there have been some positive trends for anyone willing to look at the numbers bit deeper:

As President Obama said himself, that was the message in Friday's Labor Department report, which showed that the United States economy added 151,000 jobs in October. Nearly 15 million people are still out of work, and the unemployment rate remains stubbornly high at 9.6 percent.

In addition to the October gains detailed in the Labor Department's monthly employment report, the government also revised estimates of job growth in August and September to significantly higher levels. The September private-sector job gain was adjusted from 64,000 to 107,000. The August figure was upped from 93,000 to 143,000. Obama seized on the new numbers to note that the economy has now added over 100,000 private-sector jobs for the fourth month running and has seen 1.1 million new private-sector jobs since January.

None of the increase in jobs last month came from the government sector, where employment was essentially flat. That signaled two different trends at work. On one hand, state and local governments laid off fewer workers than they had been in recent months, in part because Congress approved money this summer to prevent teacher layoffs and in part because many of the big state and local layoffs have already occurred.

The job gains were concentrated in the private sector, especially in service industries. Temporary help firms added 35,000 positions, health-care employers added 24,000, and the retail sector added 28,000 jobs.

Until there are roughly 300,000 new jobs created a month, the jobless rate won't go down. But we're on the right track overall here. The private sector has added jobs each of the past 10 months, with the public sector largely contributing to the overall net loss. Still, you could argue that without stimulus funds to help tide over state budgets, the numbers there could have been far worse.

We shouldn't pretend that this is reason to celebrate. Even the president himself tempers these positive developments by reflecting on the nearly 1 in 10 Americans who still don't have a job. But it's nonetheless trending in the right direction. The president inherited an economy that was shedding about 700,000 jobs a month, and an unemployment rate that was already 7.6% and climbing rapidly.

Rome wasn't built in a day, nor will the U.S. economy be turned around in one.

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