Economy Added 96,000 Jobs in August

This is not the news that President Obama wanted to hear following the conclusion of the Democratic National Convention.

Earlier today, the BLS (Bureau of Labor Statistics) announced that the economy had created 96,000 non farm payroll jobs in August. Analysts had been predicting that the economy would add around 130,000 non farm payroll jobs in August, so the number was a disappointment.

The national unemployment rate dropped from 8.3% to 8.1% in August. Good news right?

Wrong.

The drop in the unemployment rate was due to hundreds of thousands of people leaving the labor force.

In July, there were 155,013,000 people in the civilian labor force. Of those people, 142,220,000 were employed and 12,794,000 were unemployed. This left us with an unemployment rate of 8.3%.

In August, there were 154,645,000 people in the civilian labor force, meaning that 368,000 people left the labor force over the course of a month. 142,101,000 of these people were employed, and 12,544,000 people were unemployed. This left us with the August unemployment rate of 8.1%.

A few troubling pieces of data:

-the number of people who are currently NOT in the labor force but want jobs jumped from 6,554,000 in July to 6,957,000 in August

-the labor participation rate dropped to 63.5% in August, which is the lowest that it has been since September of 1981. The labor force participation rate for men aged 16 years and over currently sits at 69.8%, which is the lowest number on record (note: the labor force participation rate is the percentage of adults that are employed or actively seeking employment).

It should be noted that total non farm payroll jobs for June (from 64,000 to 45,000) and July (163,000 to 141,000) were revised lower.

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This was not the news that President Obama wanted to hear following the Democratic National Convention.

After all, he asked the American people for four more years, predicated upon the argument that the US economy was going in the right direction. Today's employment report will do him no favors and will give Mitt Romney plenty of ammunition.

Romney had this to say following the report:

"There’s almost nothing the president has done in the past three and a half, four years that gives the American people confidence that he knows what he’s doing when it comes to jobs and the economy"

and:

"What is he going to do to get this economy going? And all he said last night was the same as what he said four years ago — which, by the way, he made a lot of promises four years ago. Can you think of any of those promises that was met? I mean, he was going to create jobs. We haven’t. Lower unemployment? He hasn’t. Rising take-home pay? It’s gone down."

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Today's employment report significantly increases the chances of further monetary stimulus being announced over the coming weeks.

Source: BLS.gov - Employment Situation Summary

Source: Historical Unemployment Rates

Filed under: General Knowledge