America's Unemployment Numbers are as Confusing as Ever

The Bureau of Labor Statistics has two big numbers for us, and they don't stack up. Which one is more important today?

Feb 7, 2014 at 12:12PM

Today's U.S. jobs report from the Bureau of Labor Statistics is (choose one):

  1. Great!
  2. Terrible!
  3. Both?
  4. I'm so confused!

It hasn't exactly been easy to parse the BLS' deluge of jobs data in recent months, especially since your takeaway will vary widely by your interpretation. That explains why Dow Jones Industrial Average (DJINDICES:^DJI) futures, which had been firmly positive before the 8:30 a.m. EST data dump, initially fell into the red before quickly rebounding. One of the best real-time takes on the jobs numbers came from economist Justin Wolfers on Twitter:

Ugh. Payrolls +113k. December revised from +74k to +75k. November from +241k to +274k. Unemployment 6.6% Folks, this isn't good news.

— Justin Wolfers (@JustinWolfers) February 7, 2014

But, wow, HERE'S THE SILVER LINING: Household survey shows employment +616k (after adjusting for population controls).

— Justin Wolfers (@JustinWolfers) February 7, 2014

Color me confused.-Moderately disappointing payrolls report-Incredible household survey. Your conclusion depends how you weight 'em.

— Justin Wolfers (@JustinWolfers) February 7, 2014

Today's data suggest recent trends of good-but-not-great jobs growth is continuing. But they warn us to be wary of a slowdown.

— Justin Wolfers (@JustinWolfers) February 7, 2014

So what did the numbers actually tell us?

As Wolfers pointed out, different numbers are telling us different things. The headline numbers were 113,000 and 6.6%, which were the number of nonfarm payroll jobs added and the new unemployment rate, respectively. This pushes the official employed-Americans tally to 137.49 million, which is still 851,000 fewer than were employed in December 2007 before the start of the recession. However, the BLS' household survey was quite different -- after adjusting for population controls, it found that 616,000 people found jobs last month, which is the fourth-largest monthly improvement since the end of the recession and the fifth-largest monthly improvement of the past decade. Using that number, we find that there are now 332,000 more employed Americans than there were before the recession, or 543,000 more employed Americans after adjustments.

Other important but overlooked numbers:

  • 1.8 million: new full-time jobs created over the past year.
  • 8,000: new part-time jobs created over the past year.
  • 1.3%: year-over-year drop in unemployment, from 7.9% last year to 6.6% today.
  • 239,000: the number of people who have left the labor force in the past year.
  • 1.06 million: the drop in the number of long-term (27+ weeks) unemployed.

The economy continues to improve, and the decline in long-term unemployment is particularly heartening. Have we finally overcome the lingering effects of the financial crisis? That depends on which numbers you want to use.

America still has plenty of gas left in its tank
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Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.

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