Unemployment Drops to 6.7 Percent, but Don’t Celebrate Yet

And with a wave of a wand, abracadabra, unemployment in December dropped from 7 percent to 6.7 percent.

Like most things coming out of the Obama Administration, it’s too good to be true.

The apparent positive change in America’s chronic joblessness is built on the continuing economic tragedy many families are suffering under.

The jobless number that will be touted by the White House, Democrats and the media hides the fact that the country’s labor participation rate also fell, from 63 percent to 62.8 percent, the worst performance in more than 30 years.

It also disguises that the number of new jobs created in December, 74,000, was only about a third of the 200,000 most analysts expected. The country’s population grew by 178,000 in the same month, so the country effectively saw negative job growth during December in terms of the population increase.

Considering that the holiday season is traditionally the time of year that retailers hire loads of temporary help, the low jobs figure is especially disappointing and probably means a lot of families weren’t able to spend money on presents and holiday activities like they would have wanted to, which in turn is bad news for merchants.

The unemployment figure of 6.7 percent comes from the Bureau of Labor Statistics’ U-3 report. The U-3 report excludes many people who have either given up looking for a job or who are underemployed, working part time because there are no full-time jobs available. (Compounding that situation is Obamacare, which has led many employers to lay off people and cut back hours to avoid penalties and expensive requirements written into the law.)

The U-6 report is more inclusive, and that number hasn’t moved, coming in at 13.1 percent for December. Even so, some economists have suggested that the real unemployment rate is still higher.

The statistic that allows the Administration to come up with a seemingly positive performance, though, is the number of people who have been leaving the labor force altogether. This would be people who have given up or who have been unemployed for so long that the federal government simply stops counting them.

According to the BLS, we lost 347,000 people from the labor force in December. Since those people were previously counted among the ranks of the unemployed, bingo, the unemployment rate goes down despite the overall miserable statistics.

When the magic dust settles and the laser light show stops, the country will still be waiting for an Administration and Congress that will take the economy seriously and not just look to score political points.