The unemployment rate declined from 8.3% in July to 8.1% in August. However, the number of new jobs created was less than expected. The decline in the unemployment rate was largely caused by workers dropping out of the labor market.
Ironically the underlying economic indicators are much stronger than the labor market report indicates.
President Obama is 86,000 jobs short of regaining all jobs that were lost during his presidency.
However, the economy still needs 4,172,000 jobs to recover all that were lost during the recession.
Although the economy is relatively strong, a significant number of jobs are not likely to be created until after the election. Businesses are uncertain about the election outcome, the European debt crisis and the Fiscal Cliff.
The unemployment rate declined from 8.3% in July to 8.1% in August, but the labor force decreased by 368,000 workers. This caused the unemployment rate to decline. The shrinkage of the labor force was probably related to the loss of part-time jobs, which decreased by 215,000.
The number of new jobs created (96,000) was disappointing, especially since the economy created 141,000 jobs in July. Economists predicted 125,000 to 140,000 new jobs would be created.
The private sector created 103,000 jobs in August, but government cutbacks subtracted 7,000 from that amount.
Over the last year, the economy created 153,000 new jobs a month.
In August, most new jobs were created in the following industries:
Leisure and Hospitality: 34,000
Business and Professional Services: 28,000
Health Care: 21,700
White and Hispanic unemployment went down slightly, black unemployment was unchanged
White unemployment: 7.2%, down from 7.4%
Black unemployment, unchanged at 14.1%
Hispanic unemployment: 10.2%, down from 10.3%
Teenage unemployment increased notably to 24.6%, from 23.8% in July.
What does the Unemployment Report Mean?
The economy is stronger than the number of jobs created suggests. For example, motor vehicle sales continue to rise, retail sales have increased, new home sales have increased, consumer sentiment is up, and oil prices have stabilized.
If this is true, then why is it not reflected in the labor market report? For two reasons:
- A significant number of jobs are not likely to be created until after the election. Businesses are awaiting the outcome of the election before making major investment decisions.
- Investment uncertainty is caused by the European debt crisis, the potential of the fiscal Cliff and the presidential election.
Job Creation Scorecard on the President: Fact Check
Obama has recovered all but 86,000 jobs that were lost during his presidency
To fully recover all jobs lost during the recession, there still needs to be 4,172,000 jobs created.
The recession caused the loss of 8,305,000 jobs. (It started in December 2007 and bottomed out in December 2009)
4,086,000 jobs were lost during George Bush’s presidency
4,219,000 jobs were lost during Barack Obama’s presidency
4,133,000 jobs were regained under Obama’s presidency
President Obama is 86,000 jobs short of regaining those lost during his presidency
4,172,000 jobs still need to be created to recover all that were lost
Last modified: June 20, 2017