Another "Take" On The Recent Unemployment Numbers -- May 6, 2018

Updates

May 8, 2018: CNS News has more on this. But nothing more than what the reader said below. From the link:

Last month, a record 95,745,000 Americans were counted as "not in the labor force," meaning they are not employed and are not seeking a job, according to the Labor Department's Bureau of Labor Statics. "This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work," BLS said.

In a March 2018 report, the Congressional Budget Office noted that a lower labor force participation rate is associated with lower gross domestic product and lower tax revenues. It is also associated with larger federal outlays, because people who are not in the labor force are more likely to enroll in federal benefit programs, including Social Security.

Lower tax revenues? April, 2018, tax revenue -- sets all-time record.

Original Post 

From a reader who has consistently provided great analyses of some of my overly-exuberant posts on the blog, regarding the recent unemployment numbers:

I can't answer all your questions about the jobs report, but I can tell you why I was not impressed with this month's drop in the unemployment rate (although I'm generally impressed with it at this level).

Simply put, the reason the unemployment rate went down in April was because 239,000 people who were counted as unemployed in March quit looking for work in April and hence were not counted as unemployed ... the unemployment rate comes from the household survey, or should I say extrapolated from the household survey, because only 60,000 households are queried each month, and the main data page for survey that is here: http://www.bls.gov/news.release/empsit.a.htm. [And, yes, there is no "l" at the end of that link.]

• At the link you will see the number of unemployed went down while the count of the employed barely budged. 

• Meanwhile, that "not in the labor force" went up, to account for the drop in the unemployed.

Here's how I described what the numbers showed for my synopsis of economic reports, which will give you an idea how those numbers tie together:

• the April household survey indicated that the seasonally adjusted extrapolation of those who reported being employed inched up by an estimated 3,000 to 155,181,000, while the similarly estimated number of those who reported being unemployed fell by 239,000 to 6,346,000; 

• which thus meant a net 236,000 decrease in the total labor force... 

• since the working age population had grown by 175,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 410,000 to a record 95,745,000.... 

• with the number of those in the labor force decreasing while the civilian noninstitutional population was increasing, the labor force participation rate fell 0.1% to 62.8%.... 

• at the same time, since number employed was virtually unchanged, the employment to population ratio, which we could think of as an employment rate, fell 0.1% to 60.3%... 

• in addition, the decrease in the number unemployed was also large enough to lower the unemployment rate from 4.1% to 3.9%, the lowest in 18 years... 

• meanwhile, the number who reported they were involuntarily working part time fell by 34,000 to 4,985,000 in April, which was also enough to lower the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 8.0% in March to 7.8% in April, the lowest since May 2001....

Moreover, since they only survey 60,000 households, this report has a margin of error of +/- 0.2%.

My reply at the original post, linked above. I find this incredibly fascinating. A huge "thank you" for the reader to provide such a lengthy rationale for the unemployment numbers.

I am clearly out of my league. LOL. I may have to add a new "disclaimer" to the blog. But at the end of the day, I certainly learn a lot.

I would love to see an in-depth statistical analysis from The New York Times or Bloomberg "why" folks drop out of looking for work. One can think of a gazillion reasons, but it would still be interesting.

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A Day At The Mall