April's Awful Jobs Report
It's hard to decide which aspect of the horrid April employment report the Bureau of Labor Statistics released on Friday is the most troubling: the understated unemployment rate, the awful raw number of jobs added, their suspect seasonal conversion, or the sickening attempt at positive spin by the Obama administration's labor secretary.
As to the genuineness of the official seasonally adjusted unemployment rate, the jig is basically up. It's clear that many Americans, even among the relatively disengaged, have long since figured out that the official figure, which dipped to 8.1% in April, doesn't include an extraordinary and unprecedented number of those who have given up looking for work. At 63.6%, the labor force participation rate is back to where it was in the early 1980s. Qualitatively, and despite a few years during which baby boomers have begun to collect Social Security, today's rate is worse, because the frequency of stay-at-home parenting was far higher three decades ago. ZeroHedge has calculated that a participation rate equal to its post-1980 average would have generated an unemployment rate of 11.4%. Even establishment media reports from the likes of the Associated Press (aka the Administration's Press) acknowledged that April's rate drop occurred "only because more Americans gave up looking for work."
It's hard to understate how deeply disappointing April raw numbers of jobs added were, and how lucky the administration was (at least I hope it's luck) that the seasonal conversions to 115,000 and 130,000 jobs added overall and in the private sector, respectively, came in as high as they did.
In early February, I wrote:
[T]he acid test for Team Obama’s claim that the economy is finally legitimately recovering will come during the next five months (February through June).
Despite a clearly larger pool of people who want to work or could be looking for work, through three of the first five months of the acid test period, this year's economy has added fewer raw jobs than the 2004-2006 average for those same months. It has also added fewer than last year. The trend this year is even worse: February was okay, March trailed where it needed to be, and April stunk to high heaven. Sadly, it all makes sense. Last year's peak in gas prices came in early May, about a month later than what (we hope) was this year's early-April high point. In 2011, job creation in May and June fell off badly compared to what was needed. May and June 2012 seem to be on track for a repeat, or worse, as gas prices will almost certainly be higher than what motorists paid last year.
Most Americans don't appreciate how truly bad the situation is because April's seasonal adjustments worked in the administration's favor. Somehow, even though the economy really added 283,000 and 233,000 fewer jobs in April 2012 than it did in April 2011, and 2010, respectively, April's seasonally adjusted result was only 136,000 lower than 2011 and 124,000 lower than 2010. I'm not saying that the calculations were cooked (seasonal adjustments in March made things look a bit worse than they really were that month), but it wouldn't have been unreasonable to expect that the 896,000 jobs actually added in April would have generated a zero or even negative result after seasonal conversion. I've been saying for years that relying solely on seasonally adjusted numbers during a time of abnormal economic volatility is foolish, and that the press's almost universal failure to even look at the raw numbers in such times is derelict.