Reclaiming Common Sense

 The Monthly Employment Situation report was released this past Friday. The  column "Crazy March Jobs Report" detailed how the non-seasonally adjusted (NSA) unemployment data revealed that  the unemployment level was just over 7.2 million and comparable to the March 2007 level of 6.953 million. The problem is that the workforce participation rate is considerably lower (62.84% vs. 65.89%.) This does not mean that we can just add 3% to the official unemployment rate.  The true unemployment rate, the U-7 ratethat was coined by this column," when factoring in the participation rate, is over 8% and may be as high as 11.56%. Unemployment is also impacting men more than women. The article "Men STILL Recovering from the Recession" details how we have comparable numbers of men and women unemployed now, March 2017, as compared to March 2006.  You can see by the first graph that the unemployment level of 2006 was comparable to that of March 2007. The effective unemployment rate for men is  10.49% while the U-7 for women is 6.93%. Earlier this week Fed Chair Yellen said that the official unemployment rate can be misleading due to participant drop-outs. Could she be reading this articles that I write?Why am I digging into the unemployment data from the Monthly Employment Situation report while discussing the weekly unemployment data? The data from this week and next week will give us an idea where the unemployment level will be recorded for the Jobs Report.

First-time Claims Recorded an Increase and Reported a slight Decrease in claims. The data for last week was revised up from 207,565 to 208.501. This is solid. The data ticked up to 239,944 which is still solid and at 17 year lows. The data is following the general pattern we have seen for years. It was drop back next week and level out for the rest of the month. Low levels of first-time claims means low levels of continuing claims.

The data could have been reported higher or lower. The seasonal factors have been all over the place since 2000. The data could have been reported as low as 220,000 or as high as 265,000. It was reported at 234,000. Up was down - that is the power of seasonal factors.

The continuing claims number continues to slide lower. We have seen more people returning to work. Unemployment levels are dropping. The participation rate is increasing month to month. Full-time jobs are increasing month over month. We have elevated levels of people working two jobs. All of this means that the CPS unemployment level should continue its downward trend for next month's April Employment Situation report.

The unemployment situation is improving, even if the Federal Reserve is a bit confused regarding the participation rate and its impact on the unemployment report.  The reality is that we have men and women who are unemployed and not participating in the economy. They are not counted as unemployed during the weekly reports because they are either not eligible for benefits or are not collecting benefits because they have been out of the workforce for more than six months. The continuing claims number is low because the first-time claims levels are low.

Enjoy your Maundy Thursday. There will be no Good Friday Column.

Happy Passover. Happy Easter.