Please ensure Javascript is enabled for purposes of website accessibility

America's Unemployment Numbers are as Confusing as Ever

By Alex Planes - Feb 7, 2014 at 12:12PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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

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 (^DJI 0.03%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,261.90 (0.03%) $8.77
Twitter, Inc. Stock Quote
Twitter, Inc.
TWTR
$38.29 (2.68%) $1.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.