The real unemployment rate – October 2020
Bottom Line: September delivered a fifth consecutive month of huge job gains. It continues the trend we've seen as lockdowns have eased during the pandemic. 2020 has demonstrated that if we give businesses room to breathe they’ll make the most of the opportunity. Perseverance continues to prevail. Unfortunately, and especially as we’re closing in on Election Day, nothing in our society is free from being politicized. As a result, the outstanding jobs gains and improvement with the unemployment rate were largely panned by most economists and news media. Those economists and media outlets are just as wrong today as they were regarding the impact of the Trump tax cuts for our economy, the impact of the partial government shutdown on our economy and most recently, projecting unemployment to go far higher during the pandemic than it did and underestimating the impact of reopening's for the economy. That’s why I break down the employment report monthly. There are two sides to stories and one side to facts. Less discuss the facts...starting with the real unemployment rate.
First, the headline numbers:
- Unemployment rate 7.9% (Improvement of 0.5%)
- +661,000 jobs
- Positive revisions from previous months totaling 145,000 jobs
Industries for biggest jobs recoveries:
- #1 Leisure and hospitality
- #2 Retail
- #3 Healthcare
As was evidenced in the ADP private sector jobs report, there was across the board growth including strong gains in manufacturing and construction. The only sector which saw a decline was government work which decreased by greater than 200,000 jobs. I referenced the false spin associated with the negative reporting on these numbers. It shows up with the revisions. The Bureau of Labor Statistics undercounted previous month’s jobs numbers by 145,000 jobs. Add them into the mix and your net number is 806,000 jobs added during the month. Excluding government jobs, we would have had another million plus jobs month. Once again, facts over narrative.
Now for the real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for:
- Actual: 12.8%, an improvement of 1.4% over August
Key takeaways:
- Despite misleading coverage of September’s jobs report the news was exceedingly positive with one of the ten strongest months for private sector job growth in American history.
- There’s continued room for optimism and the possibility of a rapid recovery for much of the economy
- The real unemployment rate improved by even more than the base reported rate – which is the best possible news
After reaching the best levels since March, the Labor Force Participation rate inched down by 0.3% which is the lone fly in the ointment this month and did account for some of the decline in unemployment rate. Next up, the demographics of the unemployed in part two.