Friday, February 4, 2011

Unemployment Rate Drops to 9.0%

The U.S. economy added 36,000 nonfarm jobs in January and the  unemployment rate was 9.0%, according to the Bureau of Labor Statistics.

Keynesian economic forecasters, who madly attempt to forecast these numbers were way off, with the consensus forecast that the unemployment rate would climb to 9.5% from 9.4%.

The focus here should be on the fact that private sector jobs increased by 50,000, while government jobs declined by 14,000. Ten thousand of the government decline in jobs was at the local level, not Federal. What you have hear is Bernanke's manipulated economy, coupled with the financial squeeze in the government sector.

And there was an interesting inflation sign: Average hourly earnings rose a better-than-(Keynesian) expected 0.4%.

BTW: Keep this drop in unemployment in perspective, part of the drop was a result of of a 504K decline in the labor force. This could be as a result of the storms, retirees, discouraged. I'm still expecting a gradual improvement in unemployment but these numbers can swing pretty wildly. This one is going in the direction I expected, but the drop does appear pretty dramatic.


  1. At 64.2%, the labor force participation rate (as a percentage of the total civilian noninstitutional population) is now at a fresh 26 year low, the lowest since March 1984, and is the only reason why the unemployment rate dropped to 9% (labor force declined from 153,690 to 153,186). Those not in the Labor Force has increased from 83.9 million to 86.2 million, or 2.2 million in one year! As for the numerator in the fraction, the number of unemployed, it has plunged from 15 million to 13.9 million in two months! The only reason for this is due to the increasing disenchantment of those who completely fall off the BLS rolls and no longer even try to look for a job. Lastly, we won't even show what the labor force is as a percentage of total population. It is a vertical plunge.

  2. Maybe a whole bunch of people left the country for greater freedoms and opportunity elsewhere. I bet Cuba is a better place to live than Detroit or Cleveland.