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The federal government told you yesterday that the jobs market in April was lackluster — that payrolls expanded by just 115,000, much less than Wall Street expected.
The anemic number then spooked investors, which sent the Dow Jones industrial average down 168.32.
I’m here today to tell you that the labor picture in April wasn’t even that good.
Sure the unemployment rate fell to 8.1 percent from 8.2 percent, but that was because the percentage of working-age folks looking for a job fell to 63.6 percent in April — the lowest level in 31 years!
The others have given up looking for work.
This is a very poor showing so many years after an economic downturn, especially since the Federal Reserve has hurled everything — including the kitchen sink — at the problem and Congress has exhausted its ability to spend money to get the country out of trouble.
Keep in mind that at least 150,000 jobs are needed each month just to keep up with new people trying to enter the work force. That figure is even bigger this time of year when college students are graduating and would like to see their diplomas start to pay off.
Labor’s jobs report was even less good if you look at the raw numbers — before the Washington wonks seasonally adjust the number to smooth out the rough spots.
The raw numbers show 896,000 jobs were actually created in April. Now that might seem like good growth — but it’s not. Last April, 1.179 million positions were created.
As I said, both figures come from the unadjusted data and you can find it yourself on the Bureau of Labor Statistics website without too much effort.
But there’s even a bigger problem — a lot of this year’s not-seasonally adjusted growth may be a figment of Labor’s imagination.
Over the years I’ve talked too much about something called the Birth/Death Model, which is a guesstimate that the Labor Department uses each month to take into account small companies that it thinks — but can’t prove — are just starting up and are invisible to government labor surveys.
During the vast majority of months, the government assumes these small companies are hiring workers rather than laying people off. And in normal economic situations this is probably true. But these are not normal times.
Take a look at what Labor did to the April figures. It added an incredible 206,000 jobs for the Birth/Death Model.
In other words, 206,000 of the 896,000 not seasonally adjusted jobs are just a computer guess and may not actually exist.
What is remarkable is that the Birth/Death guess was raised to 206,000 this year from only 176,000 in April 2011, despite the obvious decline in economic activity this spring.
And 176,000 was considered wildly generous back then.
Without the guess, today’s headline figure — 115,000 jobs — would have been at lot worse.
That might be news to you but it isn’t news to all those folks out of work so long that they have simply given up looking for work.
They don’t believe the unemployment rate drop to 8.1 percent is very good news.
It’s really bad news.
So bad, in fact, that a President might start worrying about keeping his job.