It sounds dreadful. After drifting down consistently since last fall, the unemployment rate has suddenly shot up again, from 9.7 percent in March to 9.9 percent in April. But don't despair: A rising unemployment rate is actually one of the best signs yet that the economy is bouncing back.
The unemployment rate rose for the right reason. Instead of shedding jobs, employers added 290,000 jobs in April, the strongest showing since 2007. The reason the unemployment rate went up is that a lot more people are suddenly looking for work. The government said that the labor force swelled by 805,000 people in April. That's more than three times the number of new jobs, so the proportion of people looking for a job but unable to find one went up. Still, that big increase in the labor force marks an important shift in sentiment among people on the fringes of the economy.
Huh? So does that mean that a fall in the unemployment rate would have been a bad thing? And if the unemployment rate continues to rise? Also a good thing according to Newman:
Another 610,000 people entered the labor force without being technically unemployed, a sign that first-time workers and other job seekers have decided to get off the couch and start hustling. There are a lot more where they came from, which means the unemployment rate might still rise in future months, before it turns around and starts declining for good. For once, it will be something to cheer.
As could be expected, commenters posting to this U.S. News blog were a bit more than stunned at Newman's reasoning:
This is the worst doublespeak I've ever seen. I think it would be good news if you became an unemployed journalist! You deserve to get fired for this crap.
When 120,000 temporary census jobs are part of the 290,000 jobs created in the economy this reporting cycle, and the U6 broader unemployment rate ticks up .2% to 17.1% total there is no good news. There is no "jobless recovery", that is the biggest oxymoron on the planet.
Should you think this attitude was because it was just a U.S. News blog, you would be wrong. The same attitude is echoed in a regular U.S. News & Report article by Liz Wolgemuth:
On the day following the U.S. stock market's nearly 1,000 point intraday plunge, the Labor Department reported that employers added 290,000 jobs in April, the biggest monthly gain since March 2006. While it remains to be seen what effect it will have on investors who are focused on the sovereign-debt crisis in Europe, this is good news for recession-weary job seekers. The unemployment rate jumped to 9.9 percent last month, from 9.7 percent in March, as hopeful workers flooded back into the job market to search for jobs.
And now Wolgemuth's bizarre reasoning as to why workers are "hopeful" again despite the rise in unemployment:
Economists expected that the economy would add 180,000 jobs in April and the unemployment rate would remain at 9.7 percent. The higher unemployment rate may suggest that workers jumped back into the labor market faster than economists were expecting. It turns out that March hiring was much better than originally reported.
Huh? Wake me up when we finally leave the Bizarro World of U.S. News & World Report. Of course, the commenters posting to this article were somewhat less than impressed by the reasoning in which rising unemployment is a positive sign:
Who really authored this article? Rahm Emanuel?
Two years ago these same numbers would have had the writers claiming the end of the world. Gee- The last few days of stock performance sure show that investors think all is good! What a load!
