I’m beginning to think the official unemployment rate is completely useless.
Today, the Labor Department released what appeared to be good news. The unemployment rate fell to 5.7% in December, the lowest level in 14 months. Great, right?
Alas, no. December’s rate fell, but the month only saw 1,000 new jobs added to the workforce. The overall rate dropped to 5.7% not because the unemployed were finding jobs, but because fewer people were looking for work. Indeed, as the AP reported, the Labor Department explained the drop in unemployment by noting that more than 300,000 people gave up their search for jobs and dropped out of the pool of available workers.
“The rate is going down, but it is going down for the wrong reasons,” said Bill Cheney, chief economist at John Hancock Financial Services, noting that it fell not because people were finding work. “That doesn’t make you feel really good about the state of the jobs market.” Considering that economists expected the economy to add as many 150,000, Cheney described the 1,000 new jobs “quite shocking.”
Today’s Labor report also showed that employers have added just 277,000 new jobs since July, cutting earlier estimates of growth in October and November.
Keep in mind, Bush sold his third tax cut plan to Congress on the premise that it would create 300,000 jobs per month. As such, if the White House was right about the effect of the latest tax cut, the economy should have added well over a million jobs since July.
As Wes Clark likes to say, with a record like this, George W. Bush shouldn’t be running for president, he should be running for the hills.