With the release of the July Bureau of Labor Statistics report on unemployment, which showed a rise in payroll employment of 117,000 jobs and a decline in the unemployment rate of 0.1 percentage points, the media have taken to portraying these very modest improvements as a sign that the Obama economy is improving in some ways.
CNN called the report “a welcome piece of good news,” claiming that it “sharply contrasted other recent readings pointing toward an economic slowdown.” However, as CNN noted, “The Labor Department said the improvement was mostly due to people leaving the labor force.” The labor force participation rate fell to a 25-year low.
The BLS defines the Labor Force Participation Rate as “the labor force as a percent of the civilian noninstitutional population.” Thus, it is the labor force, namely the employed population plus those who had “made specific efforts to find employment sometime during the 4-week period ending with the reference week” divided by the total population of working age (over 16 years) less military personnel and prisoners. The LFPR rises if the number of employed people and job seekers rises, and it falls if the number of job seekers and employed persons falls.
The AP was far less congratulatory, calling the report a “modest improvement.” The AP also noted the fall in the Labor Force Participation Rate in the eighth paragraph, noting that it was the “lowest in 27 years.”
The fall in both the unemployment rate and the LFPR suggests that the decline in unemployment was primarily driven by job seekers giving up on their job searches. That even the mainstream media bother trying to spin these data as “good news” just shows how modest the alleged economic recovery has been in spite of two quantitative easings and hundreds of billions of dollars in stimulus. If this is our economic future, our children will know a life that is, to quote Thomas Hobbes, “nasty, brutish and short,” no matter how much “free” healthcare the bankrupt Western nations lavish upon them.