Part 1 - The real unemployment rate 5-8-17:

Part 1 - The real unemployment rate 5-8-17:

Bottom Line: On Friday, the BLS produced an employment report which was one part decent, one part expected and another part confounding. 

  • The decent - the headline jobs number for April: +211,000 jobs
  • The expected - past upward jobs revisions
  • The confounding - the positive jobs revisions were for February but not March (which had a negative revision)

So once again I find myself finding it most likely that we'll still have upward revisions to the March employment report with the 2nd revisions that we'll receive next month. While the other three months are fairly similar between the ADP private sector report and the government report - March remains odd with a 176,000 job disparity between the two. As for the real unemployment rate...

First let's take a look at the reported unemployment rate at 4.4%. This was down from 4.5% coming out of March. As we know that doesn't account for the long term unemployed. So each month I bring you the real unemployment rate.   

This first entry is specific to what the real unemployment rate is and how labor participation factors into this important story:     

  • Government reported unemployment rate: 4.4%, down from 5% year over year (-12%)
  • Actual: 8.6% down from 9.3% year over year (-7.5%)

So here are four relevant points:   

1. When the long-term unemployed & marginally employed are factored in the real unemployment rate remains nearly double the base reported rate  

2. The jobs market aside from the long-term unemployment and part-time work is pretty strong and is still gaining some momentum. 

3. 1.6 million are long-term unemployed (100k better than last month), 5.3 million are underemployed (part-time seeking full-time work - down 300,000) & 1.5 million are marginally attached to the workforce (100k better than last month)

4. The labor participation rate dropped a tenth from 63% to 62.9% - this is one least optimistic numbers in the bunch that explains why the figure in the third takeaway is bigger than the total jobs number for the month

In part two we'll explore the demographics of the unemployed...

Brian Mudd

Brian Mudd

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