The July Unemployment Report: The Numbers Behind the Numbers

That surprise report on U.S. job losses, showing a drop of one-tenth of a percentage point in the unemployment rate from June to July, is being greeted warmly on Wall Street today, despite that the decline doesn’t quite reflect reality.

First, the numbers. The U.S. Department of Labor today put the unemployment rate with 9.4 percent, with the economy having lost 247,000 jobs last month. That’s the fewest job losses in one year, and a big drop from the 443,000 jobs lost in June. Meanwhile, the report revised its number of job losses in May and June, adding back about 43,000 jobs for those two months.

Analysts had been calling for the July unemployment rate to increase to about 9.7 percent. Economists called today’s report a “turn for the better,” with some thinking the worst of job losses are over. They might be right.

But the New York Times and the Wall Street Journal today note the numbers behind the unemployment rate.

Over at the New York Times, economics blogger David Leonhardt says the only reason the unemployment rate dropped is because more people stopped looking for work and were thus ineligible to be counted as officially unemployed. He says the share of adults with jobs actually fell from the previous month.

The Wall Street Journal goes a step further, and says 10 percent unemployment is still very likely — even as the economy begins to recover:

When the economy recovers, more people are likely to reenter the labor force looking for jobs. People who decided to return to school during the downturn, for instance, would eventually return to the job search and help push the unemployment rate higher. (The government’s broader jobless rate declined a fifth of a percentage point to 16.3%. But its still-elevated level signals how many people want full-time jobs but stopped looking because they can’t get one.)

Still, investors are happy to take what good news they can get today. And so’s the White House (though even President Obama expects the rate to rise again). Since the recession began in December 2007, the economy has lost about 6.7 million jobs.

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