fuzzy math on unemployment numbers

Date: Monday, March 10, 2008 6:29 PM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1831 -- 3/10/2008 >>>>>

In the month of February over 63,000 jobs were eliminated. While these jobs
were being destroyed the official unemployment rate dropped from 4.9 to 4.8%.

huh?

You are probably wondering how the unemployment rate could go down when jobs
are being eliminated. Go to this web page for the February report on
unemployment, and plenty of gobbleygook to explain what the numbers mean.

http://www.bls.gov/news.release/pdf/empsit.pdf

If you want the simple explanation without having to read that long document,
the reason why the jobless rate went down, rather than up, is because people
couldn't find jobs so they stopped looking for work.
According to our Orwellian method of calculating unemployment, if people leave
the labor force they are jobless, which means that they aren't necessarily
unemployed. Got it?

That led me to thinking that the way to solve the unemployment problem in the
United States is to eliminate more jobs! Since unemployment drops when jobs
are destroyed, and we all agree that unemployment should be lower, we need to
destroy more jobs in order to achieve the goal of zero unemployment. By my
calculations, we could get unemployment down to zero by eliminating another
2,880,000 jobs!

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.foxnews.com/story/0,2933,335887,00.html

Employers Slash Jobs by Most in 5 Years, Feeding Recession Fears Friday ,
March 07, 2008

Employers slashed jobs by 63,000 in February, the most in five years, the
starkest sign yet the country is heading dangerously toward recession or is in
one already.

The Labor Department's report, released Friday, also showed that the nation's
unemployment rate dipped to 4.8 percent as hundreds of thousands of people --
perhaps discouraged by their prospects -- left the civilian labor force. The
jobless rate was 4.9 percent in January.

Job losses were widespread, with hefty cuts coming from construction,
manufacturing, retailing and a variety of professional and business services.
Those losses swamped gains elsewhere including education and health care,
leisure and hospitality, and the government.

Click here for more on this story from FOXBusiness.com.

The latest snapshot of the nation's employment climate underscored the heavy
toll of the housing and credit crises on companies, jobseekers and the overall
economy.

The report also showed that the job losses suffered in January were worse than
the government first reported. Employers cut 22,000 jobs, versus 17,000.

It was the first monthly back-to-back job losses since May and June 2003, when
the job market was still struggling to recover from the blows of the
2001 recession.

The health of the nation's job market is a critical factor shaping how the
overall economy fares. If companies continue to cut back on hiring, that will
spell even more trouble.

Friday's report was much weaker than economists were expecting. They were
forecasting employers to boost payrolls by around 25,000. However, they were
expecting the jobless rate to edge up to 5 percent. The reason why the jobless
rate went down, rather than up, is because so many people stopped looking for
work and left the labor force.

Workers with jobs, however, saw modest wage gains.

Average hourly earnings for jobholders rose to $17.80 in February, a 0.3
percent increase from the previous month. That was on target with economists'
forecasts. Over the last 12 months, wages were up 3.7 percent.
With high energy and food prices, though, workers may feel squeezed and feel
like their paychecks aren't stretching that far.

With the economy losing momentum, fears have grown that the country in on the
brink of its first recession since 2001 or is in one already.

Economic growth slowed to a near standstill of just a 0.6 percent pace in the
final quarter of last year. Many economists predict growth in the January-to-
March quarter will be worse -- around a 0.4 percent pace. Some believe the
economy is shrinking now.

Spreading fallout from the housing and credit debacles are the main factors
behind the economic slowdown. People and businesses alike are feeling the
strains and have turned cautious. Adding to the stresses on pocketbooks,
budgets and the economy: skyrocketing energy prices. Oil prices have set a
string of record highs in recent days. Gasoline prices have marched higher,
too.

To help shore up the economy, Federal Reserve Chairman Ben Bernanke signaled
last week that the central bank is prepared to lower interest rates again.
Economists predict another cut on March 18, the Fed's next meeting. The Fed,
which has been slicing the rate since September, recently turned more
forceful. It slashed the rate by 1.25 percentage points in the course of just
eight days in January -- the biggest one-month reduction in a quarter century.

The White House and Congress, meanwhile, speedily enacted an economic relief
package, including tax rebates for people and tax breaks for businesses. That
-- along with the Fed's rate cuts -- should help give a lift to the economy in
the second half of this year, says Bernanke.

Still, unemployment is expected to move higher this year. The Federal Reserve
predict the jobless rate will rise to as high as 5.3 percent in 2008. Last
year, the unemployment rate averaged 4.6 percent.

All the economy's troubles are putting people in a gloomy mood.

According to the RBC Cash Index, confidence sank to a mark of 33.1 in early
March, the worst reading since the index began in 2002.

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://news.yahoo.com/s/ap/20080308/ap_on_bi_go_ec_fi/economy

Dangerous cracks appearing in job market By JEANNINE AVERSA, AP Economics
Writer Sat Mar 8, 9:30 AM ET

Dangerous cracks in the nation's job market are deepening. Employers slashed
jobs by the largest amount in five years and hundreds of thousands of people
dropped out of the labor force --- ominous signs that the country is falling
toward a recession or has already toppled into one.

For the second straight month, nervous employers got rid of jobs nationwide.
In February, they sliced payrolls by 63,000, even deeper than the 22,000 cut
in January, the Labor Department reported Friday.

The grim snapshot of the country's employment climate underscored the heavy
toll the housing and credit debacles are taking on companies, jobseekers and
the economy as a whole.

"It sounds like the recession bell is ringing for the U.S. economy, although
it is still faint," said Stuart Hoffman, chief economist at PNC Financial
Services Group.

On Wall Street, stocks tumbled. The Dow Jones lost 146.70 points, a little
more than 1 percent to close at 11,893.69. The Dow was down 370 for the last
two days of the week.

The worsening situation will prompt the Federal Reserve to cut a key interest
rate deeply --- perhaps by as much as three-quarters of a percentage point ---
at its next meeting March 18, or possibly sooner, to help brace the teetering
economy, analysts predicted.

The shower of pink slips was widespread. Factories, construction companies,
mortgage brokers, real-estate firms, retailers, temporary-help firms, child
day-care providers, hotels, educational services, accounting firms and
computer designers were among those shedding jobs. All those cuts swamped job
gains at hospitals and other health care sites, bars and restaurants, legal
services and the government.

"Losing a job is painful, and I know Americans are concerned about our
economy; so am I," said President Bush. "It's clear our economy has slowed."

The big question: Just how much? The weak employment report pushed an
increasing number of private economists into believing the economy is probably
shrinking now. Under one rough rule, the economy would have to contract for
six months for the country to be considered in a recession.

The unemployment rate actually dipped slightly from 4.9 percent to 4.8
percent, as 450,000 people left the labor force for any number of reasons.
Economists thought many people probably gave up looking for work.

"It stands to reason that a large share of the people left because they didn't
feel like anything was there for them --- that the market was too weak to be
searching for a job at this point," said Mark Zandi, chief economist at
Moody's Economy.com.

To relieve persistent credit problems, the Federal Reserve announced Friday
that it will increase the amount of loans it plans to make available to banks
this month to $100 billion. The Fed already has provided a total of $160
billion in short-term loans to cash-strapped banks since December. The Fed, in
another step, said it will make $100 billion available to a broad range of
financial players through a series of separate transactions.

Crumbling employment conditions are feeding fears the economy will fall victim
to all the stresses. Until recently, the positive forces of job and wage
growth have helped to offset the negative forces hitting people from the
housing and credit crises. Now people and businesses alike are more cautious,
spelling more trouble for the economy.

"The debate should no longer be about whether there is or is not a recession,
only about how deep it will be," said Nigel Gault, chief economist at Global
Insight.

The elimination of 63,000 jobs in February was the most since March 2003 and
marked the second month in a row of job losses. The last time the economy
suffered two consecutive months of job losses was in May and June 2003, when
the labor market was still struggling to recover from the blows of the 2001
recession.

"Businesses got cold feet, and when that happens the easiest thing to do is to
put hiring on hold and wait until the dust clears," said Ken Mayland,
economist at ClearView Economics.

Economic growth slowed to a near standstill of just a 0.6 percent pace in the
final quarter of last year. Before Friday's employment report, many thought
growth would weaken further --- around a 0.4 percent pace. Now, however, a
growing number think the economy is contracting.

Bush's top economic adviser, Edward Lazear, acknowledged Friday that the
economy may dip into negative territory in the current quarter. Lazear's
comment was the most pessimistic assessment heard out of the White House.
He would not discuss whether the White House believes the economy will
actually fall into a recession.

The Bush administration was hoping the government's speedily enacted economic
stimulus package --- including tax rebates for people and tax breaks for
businesses --- will help bolster the economy in the second half of this year.

"I know this is a difficult time for our economy, but we recognized the
problem early and provided the economy with a booster shot," Bush said. "We
will begin to see the impact over the coming months," the president predicted.

Democrats, however, said more relief is needed now.

House Speaker Nancy Pelosi, D-Calif., spoke of charting a "new direction for
our economy." Rep. Barney Frank of Massachusetts, chairman of the House
Financial Services Committee, called for action to stem record-high home
foreclosures.

The Democratic presidential contenders, Sens. Hillary Rodham Clinton of New
York and Barack Obama of Illinois, blamed the job losses on what they believe
are failed Bush policies. "The news should put to rest any doubts that our
economy is in deep trouble," Clinton said. Obama said the employment news
meant "more heartache and struggle" for Americans.

On the employment front, workers with jobs saw modest wage gains.

Average hourly earnings for jobholders rose to $17.80 in February, a 0.3
percent increase from the previous month. Over the last 12 months, wages were
up 3.7 percent. With lofty energy and food prices, though, workers may feel
like their paychecks are shrinking.

Spreading fallout from the housing and credit troubles are the main factors
behind the economic slowdown. People and businesses alike are feeling the
strains and have turned cautious. Adding to the stresses on pocketbooks,
budgets and the economy: skyrocketing energy prices. Oil prices, which have
set a string of record highs in recent days, now top $105 a barrel.
Gasoline prices have marched higher, too.

All those problems are putting consumers in a gloomy state of mind.

Consumer confidence sank to a new low of 33.1 in early March, according to the
RBC Cash Index. That was the worst since the index began in 2002.

To help shore up the economy, Federal Reserve Chairman Ben Bernanke signaled
last week that the central bank is prepared to lower interest rates again.
Economists are now predicting a deep rate reduction by the Fed on or before
its regularly scheduled meeting March 18. The Fed, which has been slicing the
rate since September, recently turned more forceful. It slashed the rate by
1.25 percentage points during just eight days in January -- the biggest one-
month reduction in a quarter-century.

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