I have been hard on the White House communications team before, but I give them props now for giving exactly the right amount and type of emphasis to the latest employment report. Having CEA Chairman Alan Krueger make modestly positive comments on the White House blog supplemented by a few guardedly optimistic words by the President, is far wiser than getting the trumpets out of the closet and having a gloat-fest.
There are a number of encouraging signs that the U.S. economy is growing stronger (granted, the Wizards of the Eurozone could destroy them all in the coming months), but this month’s unemployment number is largely fool’s gold. Much of the drop is accounted for by people simply giving up looking for work.
Why does this matter politically, beyond the human suffering it reflects? The new number will generate an enormous amount of news coverage, which may persuade a number of people who have given up looking for work that the time is ripe to re-engage in the search for employment. That could drive the unemployment number right back up to where it was last month, if not higher.
While ironically being a positive development, because at least some of them will find those jobs they look for. Goes to show that the usually publicized measure of unemployment really isn’t a very good one. It’s just popular with the government because it’s a lower one.
Brett: Exactly, hence the measure makes bad news look like good news and vice versa. I suspect we have at least one reader who knows the history of this statistic. If we could re-baseline everyone mentally, I think the country would be well-served to have a number that matched commonsense understandings of whether things are getting better or worse.
The headline unemployment number is actually very good at what it is designed to do: give evidence as to whether we are at full employment, as macroeconomists define the phrase. As a measure of human misery, U-6 is the better statistic. As a measure of whether monetary policy needs to be tightened in order to avoid inflation, U-3 (the headline rate) is much better.
The real problem is that very few people know what the various numbers that get tossed around actually mean. That goes far beyond a discussion of unemployment figures.
J. Michael Neal wrote “As a measure of human misery, U-6 is the better statistic.”
Maybe that is what we should use then (Note that it also went down this month).
This post reminds me somehow of Winston Churchill’s praise of Clement Atlee: “A modest man, who has much to be modest about.”
If I thought Obama’s substantive economic policies to date had much merit, I might feel better about the evidence that his PR operation appears able to learn from its errors.