The Unemployment Rate Is Falling, but the News Is Bad

Moneybox
A blog about business and economics.
Feb. 7 2014 8:44 AM

The Unemployment Rate Is Falling, but the News Is Bad

467299629-senate-majority-leader-harry-reid-is-reflected-in-a
Trying to bring back unemployment benefits

Photo by Chip Somodevilla/Getty Images

Today is jobs day! The good news is that the unemployment rate fell to 6.6 percent—the lowest it's been since October of 2008. But the news is basically bad.

The economy added 113,000 jobs in January, which isn't horrible, but it's not very good either. And December's very weak 74,000 jobs was revised upwards but only very slightly to 75,000. Now November went up from a strong 241,000 to an even stronger 274,000. Taken as a whole that three-month span isn't awful. But it's not remotely the pace of job growth that you would normally associate with a rapid decline in the unemployment rate.

Now the unemployment rate is calculated based on a different survey (the household survey) from the one where the jobs growth comes from (that's the payroll survey) so it's not strictly comparable. It's tempting to reconcile weak job growth and falling unemployment by pointing to a falling labor force participation rate. But that's actually not what the data says. The payroll survey, which is generally considered more accurate, shows small job growth. The household survey shows rapid job growth. So it's not 100 percent clear what's happening.

Advertisement

This is why in a sense even the falling unemployment rate may be bad news. If everything else about the economy—fiscal policy, the number of employed people, the inflation rate, the GDP growth rate—were the same, but the unemployment rate were higher, the case for looser monetary policy would be ironclad. But the low participation rate and subsequent low unemployment rate create pressure for Janet Yellen to implement tighter monetary policy. She needs to ignore that pressure. Since the Fed started tapering, basically every economic indicator in the United States has started looking worse. And while pre-taper, stepping back from quantitative easing was often framed as a favor to foreign governments, it's clear that the taper is only exacerbating other problems in emerging markets.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

I Am 25. I Don’t Work at Facebook. My Doctors Want Me to Freeze My Eggs.

These Companies in Japan Are More Than 1,000 Years Old

  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Business Insider
Oct. 21 2014 11:27 AM There Is Now a Real-life Hoverboard You Can Preorder for $10,000
  Life
Dear Prudence
Oct. 21 2014 9:18 AM Oh, Boy Prudie counsels a letter writer whose sister dresses her 4-year-old son in pink tutus.
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 21 2014 10:41 AM Taylor Swift Just Went to No. 1 on iTunes Canada With Eight Seconds of Static 
  Technology
Future Tense
Oct. 21 2014 10:43 AM Social Networking Didn’t Start at Harvard It really began at a girls’ reform school.
  Health & Science
Bad Astronomy
Oct. 21 2014 7:00 AM Watch the Moon Eat the Sun: The Partial Solar Eclipse on Thursday, Oct. 23
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.