Analysis, Economy, News, Spin Doctor

Unemployment Dropped to 8.1%, Why Is Everyone Pissed? Here’s Why.

The April jobs report has been a major talking point for both parties recently and any sane person following the debate might think that they are losing their mind. Why? Because one channel (which will not be named) the jobs report is a great step in continued success, while on another (which shall also remain nameless) the jobs report is armageddon on paper. In light of this confusion, which would make even Tony Stark dizzy, the Aisle has taken it upon itself to crunch some numbers so that you can spin this whichever way your heart desires.

For Obama’s people, the spin is easy enough. Through the method that America measures unemployment, the unemployment rate officially drop a tenth of a percentage point from 8.2% to 8.1% while the economy added over 115,000 jobs. An important aspect of that report is also the still significant gains in manufacturing, which while still low, signal long term strength for the economy. Stick to that spin, and things should be good in Democrat land.

But here’s why people are pissed. The report also signals some bad signs for the economy in general and even some misleading numbers in terms of unemployment. Republicans will be quick to tell you that the main reason unemployment dropped was not due to jobs added, but in lack of participation in the labor market (how many people have stopped looking for jobs). So many people stopped looking for jobs in April that the country hasn’t reached this low a level in participation since 1981. While this number also includes people who retire, projections on that (as well as a normal post-recessionary dip) still indicate that if you simply add the people that stopped looking for jobs the actual number shoots up to 9.3%. If you use the projections for participation that were made by the CBO in 2008 after the effects of the Recovery Act, the number goes to 10.4%. And if you keep participation where it was when Obama was in office it’s 11.1%. And as is the normal kicker for conservative jobs-report watchers, they’ll usually tak on that under-employment is still at a high 14.5%. Easy enough to spin right?

But what about actual jobs number disappointment? That too is easy to spin for the right. Like we said earlier, the economy added 115,000 new jobs which, while any increase is good, is significantly lower than the 180,000 which was expected to be added. With GDP growth slowing (to 2.2%) economists were wondering if the GDP would speed up to match the epic jobs growth of February and January, or if jobs growth would slow down to match GDP…and it seems we have our answer. The right is also likely to bring up its demi-god Reagan. Why? Because during during the Reagan recovery of 1984 the economy in April added 480,000 jobs.

So there’s the spin both ways. Obviously there is more spin for the right because they certainly have more to justify against the official unemployment number drop, while the left is going to have to battle an onslaught of crushing numbers. For now it’s too early to tell who’s winning the narrative. Thoughts?

Sources:

April jobs report – Labor Department

IHS Global Insight

JPMorgan

American Enterprise Institute

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Election Day 2012November 2nd, 2012
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