Very interesting blog entry today from Floyd Norris, Chief Financial Editor of the New York Times. We all know that the last unemployment figures showed a rise to 10.2% and that President Obama keeps trying to explain that jobs are the last thing to return after a recession. But Norris argues that maybe things have already started to turn.
The economic reactions over the weekend to Friday’s employment report all started from the assumption that things grew much worse in October. The unemployment rate leaped to 10.2 percent from 9.8 percent. Another 190,000 jobs vanished.
Actually, none of that happened.
In reality, the government report says unemployment rates remained steady at 9.5 percent. And the number of jobs actually rose, by 80,000. And the number of jobs for college-educated Americans rose more than in any month in the last six years.
If those were the numbers in the articles, we would hear about the economy stabilizing, and talk about the Obama stimulus plan starting to have the intended effect.
Why the disparity in numbers? Because of something called “seasonal adjustment”.
…For some reason, October is the month with the largest seasonal adjustment down in jobs. So the increase in the unemployment rate does not reflect people actually losing jobs. It reflects the belief that seasonal factors should have added more jobs than they did.
So if there were no seasonal adjustment factor, jobs would have actually increased.
Studying the unadjusted numbers provides some indication that the hiring is starting to improve for better jobs. The number of jobs for college graduates, according to the household survey, rose 755,000 in October, before seasonal adjustments. That is the third-largest increase since the government started counting those figures, in 1992. (It trails increases of 895,000 in February 2002 and 755,000 in October 2003.)
On the other hand, the number of jobs fell for those with less education. If this report does indicate that the job recession is ending, it is an end that is providing immediate benefits for the educated, not for many of the people who most need help.
So when the stimulus funding really gets out on the street, probably in the spring, employment for construction jobs should increase. In the meanwhile, we need to make sure unemployment benefits remain available.