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Friday, February 03, 2012

Unemployment Drops To 8.3% As 1.2 Million People Leave Workforce

By Susan Duclos

[Update] According to the United States Department of Labor Bureau of Labor Statistics, the U6, real time unemployment which is the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force, is still over 15 percent.

A drop in unemployment to 8.3 percent should be good news except when the reason for it is that 1.2 million people simply dropped out of the workforce and are therefore not counted into the totals.

Click image to enlarge

As James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in an interview on “Bloomberg Surveillance” with Tom Keene, back in December 2011, "You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing."

[Update] Gallup explained back in December why "Growing Unemployment Optimism May Be Premature':

In contrast, Gallup's data suggest little improvement in the jobs situation. December unemployment is up slightly on an unadjusted basis. In fact, the government is likely to report essentially no change in the unemployment rate when it issues its report on December unemployment in the first week of 2012. Of course, this assumes that the labor force doesn't continue to shrink at so rapid a pace that it drives down the unemployment rate, as it did last month.

Gallup's most recent weekly job creation numbers also suggest little improvement in the jobs situation. As a result, it may be wise to exercise caution in interpreting the drop in the government's most recent jobless claims numbers.

Further, one reason unemployment is often seen as a lagging indicator has to do with the way people enter and leave the workforce. Even if the recent seeming improvement in the job market is more real than Gallup's data imply, signs of a better job market are likely to bring new job seekers into the workforce.....

The United States Department of Labor Bureau of Labor Statistics, Economic News Release, Employment Situation Summary is HERE.

Once again, as is usual in our unemployment pieces we list areas still at or above the official national average for unemployment are:

Arizona- 8.7%
California- 11.1%
D.C.- 10.4%
Florida- 9.9%
Georgia- 9.7%
Idaho- 8.4%
Illinois- 9.8%
Indiana- 9.0%
Kentucky- 9.1%
Michigan- 9.3%
Mississippi- 10.4%
Nevada- 12.6%
New Jersey- 9.0%
North Carolina- 9.9%
Oregon- 8.9%
Rhode Island- 10.8%
South Carolina- 9.5%
Tennessee- 8.7%
Washington- 8.5%

Data obtained from Bureau of Labor Statistics on the Local Area Unemployment Statistics page. (Right side)