The breaking news this morning is that the unemployment rate has risen from 9.6% to 9.8%, and the economy is growing at a significantly slower rate than was expected. The Federal Reserve had downplayed estimates last week about job growth, but even these estimates proved to be way off the mark. The range of job creation estimates spread from 75,000-200,000. Many analysts settled around a 150,000 job figure.
When unemployment initially reached 9.6%, some economists argued that the number was misleading because the increase accounted for the unemployed not actively seeking a job who became active job hunters. Individuals who are not actively seeking out work are not counted in unemployment figures.
Well, that theory has pretty much gone out the window with these new figures. The renewed optimism of these discouraged workers seems now to be unwarranted. If they were expecting more jobs to become avalible, they were disappointed. Again.
150,000 jobs were expected to be created. That number does not represent a job surplus, but an increase in jobs that were lost since the recession. However, this number was overly optimistic. There were actually only 39,000 jobs created. October saw an increase at 170,000 jobs.
However, the more concerning job creation statistic is in the private sector. Private companies created 50,000 jobs as opposed to 160,000 in October.
Oh, and the number of inactive unemployed? That number is at a record high 1.3 million individuals. Economists can no longer attribute the unemployment increase to non-active unemployed turning into active unemployed. While some still cling to weak optimism in light of the fact that our economy is growing, that optimism should not be attributed to any action the Obama Administration has taken. Yes, our economy is technically growing, but it is growing at a snail’s pace that is unacceptable for an economy as large and a country as powerful as the United States.
The unemployment rate is at 9.8% now, but why should we trust that it will go down anytime soon? It would not be a surprise if Obama’s new ban on offshore drilling caused job loss equal to if not greater than the current anemic job growth statistics. And then where are we? When FDR ran for reelection in 1936, he ran on a singular platform: “are you better off than you were 4 years ago?” Say what you will about his economic policies, he was one of the greatest figures in American history, and the fact of the matter is that people were better off in 1936. The same narrative should be at play in 2012, and as of now, are we any better off than we were 4 years ago? No, and it’s a safe bet to think that this situation will not be significantly different in 2012.