Official unemployment rate number

I hope that wherever you are that Spring is beginning to spring.  Here in Santa Fe, we can finally see the ground completely for the first time since November.  Whew!  It has been a long winter, even longer for American workers…

Yesterday the Department of Labor released its official unemployment figures.  The economy shed 36,000 in February, yet the unemployment rate held steady at 9.7%.

Analysis: Again, the only way it is possible for the economy to shed a net amount of jobs, but for the unemployment rate to hold steady is for folks who previously were looking for work, to stop looking for work.  I don’t consider this statistic to have been the kind of great news one would expect as the catalyst for a 120 point rise in the Dow Jones.  However, that is exactly what happened.

Because consumer confidence really soured in February, it will take awhile to assess the fall out from those figures – that is, there will be a lag effect.  The fallout would take the form of reduced consumer spending and a big hit to GDP.  GDP figures come out quarterly so we will not have a peek into the effect of the drop in consumer confidence on GDP for some time.  However, retail sales are reported monthly.  I will be tracking these figures very closely.

[The difference between yesterday’s data and today is that yesterday is initial jobless claims.  That figure does not include jobs that the economy has added.  The net total is the number of unemployed – those actively seeking work who can’t get it.  That figure is the numerator in the unemployment rate calculation.  The demoninator is the number of people in the economy who are employed.]

Importance grade: 10; the unemployment rate remains the critical figure in the economic recovery.  As long as it remains high, and unstable, U.S. consumers were understandably be nervous.

Jason