Thoughts on the Dreadful Unemployment Report

by: Kurt Brouwer

If you don’t have much time, these bullet points from Stephen Green, the so-called VodkaPundit, will give you the highlights in a succinct fashion. There really is not much to say other than a recitation of the bad news followed by downing the beverage of your choice [emphasis added]:

9.2% — unemployment rate for June.

0.1% — increase since May.

16.2% — underemployment rate for June.

0.4% — increase since May.

255,000 — net jobs that must be created each and every month to reach 8%.

18,000 — net jobs created last month.

44,000 — downward revision to April and May job creation.

In case you are wondering what underemployed means, it refers primarily to the 8.6 million people who would really like full-time work, but can only find part-time. Those millions of folks are not counted as unemployed. The Bureau of Labor Statistics describes them this way in the June Employment Situation Summary [emphasis added]:

..The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in June at 8.6 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job…

Prior to Friday’s release of the BLS report, there were widespread reports and estimates of job growth in excess of 100,000. On Thursday, the hapless folks at ADP released a solid job growth estimate [emphasis added]:

The ADP, Automatic Data Processing, employment survey released on Thursday showed stronger-than-expected growth in June, according to a Zack’s Investment Research report. Now, many will wait on the Bureau of Labor Statistics non-farm payroll report due out tomorrow to see if it reveals encouraging news as well.

The survey shows that private sector employment rose by 157,000, which was more than double the consensus expectations for a 60,000 job increase…

Obviously, ADP was way off, but even the consensus was too, with an estimate of 60,000. The fact that so many economists, pundits and others got this number wrong is interesting, but certainly not new. The economists who got this wrong seem to be of the school that is always wrong, but never in doubt.

For a much more in-depth look at the ‘unexpected’ news, check out the following reports from MarketWatch:

Hiring weak in June

Stocks tumble on weak job growth

Hat tip: Instapundit