Unemployment Drops Amidst Worker Discouragement

Posted: Dec 02, 2011 9:43 AM
Today's report from the Bureau of Labor Statistics found that the unemployment rate had its sharpest drop in years as employers added 120,000 jobs in November. The hiring was a modest improvement over October, but BLS said that 315,000 of the unemployed gave up searching, contributing to the drop in unemployment.

The official unemployment rate sits at 8.6%, the lowest since early 2009. The massive labor force exodus was perhaps the largest contributor to the unemployment drop, but the broader U-6 unemployment measure also found a dip from 16.2% to 15.6%. Overall, private employment rose by 140,000 while federal and state governments cut 20,000 jobs.

Unsurprisingly, The New York Times used the labor report to call for more stimulus and prognosticate on President Obama's election chances.

November’s jobs report reinforced how much President Obama needs additional stimulus, a tidy and fast resolution to the European debt crisis or some other economic miracle to reinvigorate the economy before the 2012 presidential election.

The Associated Press has also noted better news deeper in the report: prior months' employment estimates were revised upward, and the holiday season looks to slightly reinvigorate the economy.

Employers added 120,000 jobs last month. And the previous two months were revised up to show that 72,000 more jobs added — the fourth straight month that the government has revised prior months higher.

More than half the jobs added last month were by retailers, restaurants and bars, a sign that holiday hiring has kicked in. Professional and business services also rose. That means the economy likely added higher-paying jobs — more engineers, accountants and high-tech workers.

It's important to temper our emotions, however. As Larry Sabato notes, unemployment estimates are notoriously vague - there's a massive margin for error and there are always later revisions. The report underscores that the economy is still middling through a recovery, but doesn't look like we're likely be sliding into another recession.