One Decent Jobs Report Doesn't 'Fix' Things
There are two reasons why President Obama rushed to the microphone on Friday shortly after the government's Bureau of Labor Statistics (BLS) released relatively good news (by recent standards) that the unemployment rate dropped to 8.3% in January, while the economy added 243,000 seasonally adjusted jobs.
The first was to beat up on "Congress" for not yet extending to December 31 the payroll tax cut currently set to expire at the end of this month. He won't say so, but Obama's complaint with "Congress" is really with Harry Reid and the Democrat-controlled Senate. The place where congresspersons work, i.e., the House of Representatives led by Speaker John Boehner, passed a 12-month extension in mid-December, but backed down after Reid insisted on the Senate's two-month version.
Obama's second motivation was to try to make the country forget his February 2009 promise that “if I don’t have this done in three years, then there’s going to be a one-term proposition.” ABC's pathetic "Fact Check" is trying to claim that Obama was only referring to the Troubled Asset Relief Program and the nation's housing situation, but not to the economy as whole.
Nice try, guys. Not even Obama believes that. Last week, the Republican National Committee distracted itself from what it seems to believe is its primary mission, i.e., sealing the GOP nomination for Mitt Romney (never mind that the only candidate polling ahead of Obama in the general election when this column was prepared was Rick Santorum), long enough to remind everyone of Obama's promise. In reaction, the president's people surely put that 2009 statement on the agenda for his Super Bowl Sunday interview with Matt Lauer, who recalled it in the context of the economy as a whole (take that, Fact Check). Obama, as expected, told Lauer that "I deserve a second term, but we're not done." We sure aren't.
On the jobs front, January was the best month in the past nine, following eight which the press would have considered more than enough justification for unfettered gloom and doom in a conservative or Republican administration with such a high accompanying unemployment rate. The monthly average of 80,000 jobs seen during the first four of those eight months was woefully weak. Given how many Americans are unemployed, under-employed, and discouraged, the 170,000-per-month average during the four which followed really wasn't that much better.
Obviously, one month like January doesn't signal a genuine jobs recovery, but it's a start -- and to be clear, the Heritage Foundation's point that a truly recovering economy would be adding about 350,000 seasonally adjusted jobs per month is well taken. For context, the economy under Ronald Reagan added an average of over 250,000 seasonally adjusted jobs per month during the first 2-1/2 years after its related recession ended, the population-adjusted equivalent of 350,000 per month today. The private-sector component of that population-adjusted performance is over 330,000. The analogous Obama administration averages: 55,000 overall and 75,000 in the private sector.
One favorable development from Friday's report is that skeptics finally decided to start looking at the raw (i.e., not seasonally adjusted) jobs numbers instead of automatically buying into the government's seasonally adjusted results as the starting point for getting to the gospel truth.
It's about time. Someone besides yours truly needs to start making up for the almost scandalous degree to which the press completely ignores the raw data. I'm convinced that some media members responsible for covering the economy and business are oblivious to the significance, and in certain cases even the existence, of the raw data. Many, if not most, don't seem to realize that the raw numbers form the basis for what goes into the government's seasonal adjustment machine.
Recently, when I complained to a business reporter about the press's failure to even recognize the raw data, and that they frequently fail to tell readers, listeners, and viewers that the seasonally adjusted numbers are, well, seasonally adjusted, he wrote back that "the Labor Department considers the seasonally adjusted number(s) to be much more reflective of what’s actually going on in the economy. If you don’t agree, you should complain to them. In fact, I think they consider the seasonally adjusted numbers as much 'raw data' as the not seasonally adjusted numbers." No they don't -- and heaven help us all.
Nevertheless, those who are claiming that the raw numbers showing 2.689 million jobs lost in January led to an unreasonable seasonally adjusted result are incorrect, based on the marked-up BLS-generated tables below:
For as long as BLS has been tracking employment data monthly, January has had a huge number of job losses, mostly because every year employers release most of those who were hired temporarily during the previous two months' Christmas shopping and shipping rushes. As seen above, during the relatively strong years from 2003-2007, the economy lost an average of 2.7 million jobs in January. This year's seasonally adjusted conversion to 243,000 job additions is pretty much in line with the seasonally adjusted results from 2006 and 2007, the two years during which recession-plagued data wasn't factored into the five year-based seasonal calculations. That it turned out this way is largely due to luck, because the monthly raw data from the last four years has been more affected by the stinky economy than typical seasonal job-market fluctuations.
There are other interesting items which surfaced this month in the data used to determine the unemployment rate. The most important is the fact that BLS upwardly revised the number of people who aren't in the workforce by 1.2 million as a result of fresher information from the Census Bureau. Although this doesn't mean, as some believe, that all 1.2 million dropped out of the workforce in just one month, it does signify that the administration's policies during the past three years have continued to generate a combination of rampant demoralization and "going Galt" which has handicapped the economy and seriously harmed the lives of millions of individuals and families.
But let's get back to those raw jobs numbers, because the acid test for Team Obama's claim that the economy is finally legitimately recovering will come during the next five months. As seen above, during the four relatively good years of 2004 through 2007, the economy added an average of 4.11 million jobs from February through June. But that was during a time when the unemployment rate was never higher than 5.8%, and in 2007 averaged only 4.5%. An authentically recovering economy making a real dent in a horribly underutilized workforce should generate six million jobs on the ground during the next five months. If it doesn't, it won't be genuinely recovering, no matter what the seasonally adjusted numbers say, and no matter what Team Obama and their media lapdogs want us to believe they say.