Unemployment Rate Drops 0.3 Percent in September and Raises Suspicions

The government’s unemployment figures reported for September reflect that the nation’s jobless rate fell a whopping 0.3 percent and brought the unemployment rate to its lowest level since January 2009.

The unemployment rate fell from 8.1 percent in August to 7.8 percent last month, the Labor Department reported on Friday. The big decline was unexpected - economists had predicted the September jobless rate would increase 0.1 percentage point to 8.2 percent. Since the beginning of 2012, the unemployment rate has hovered in a narrow range between 8.1 percent and 8.3 percent.

Employment rose by 114,000, but the number of unemployed people counted in the government’s calculations fell by 456,000. Many have dropped out of the labor force and don’t count in the unemployed figures, and others settled for part-time work because they couldn’t find a full-time job. There are currently 12.1 million people who are unemployed. The number of long-term unemployed - those jobless for 27 weeks or more - was little changed at 4.8 million and accounted for 40.1 percent of the unemployed.

Labor Secretary Hilda L. Solis said in a statement following the report, "The significant drop in the jobless rate was driven by people going back to work, not leaving the labor force. We saw unemployment drop for every group across the board last month. The fastest-growing group of new hires was young people ages 20 to 24 — a very encouraging sign for our country's future.”

But skeptics are finding the drastic 0.3 percent drop derived from adding 114,000 (and revising upwards by 86,000 in previous months) a bit hard to swallow. A jobless rate suddenly falling to a low not seen since inauguration day - immediately after the president’s poor performance in this week’s debate and a month before the upcoming election - has stirred suspicions.

Jack Welch, the former CEO of General Electric tweeted after the report, "Unbelievable jobs numbers. These Chicago guys will do anything. Can't debate so change numbers." Mr. Welch later said in an interview, "I wasn't kidding."

Solis appeared on CNBC to say she was “insulted” that people would accuse the Bureau of Labor Statistics of fixing the report to coincide with the election and “that it's really ludicrous to hear that kind of statement.”

Douglas Holtz-Eakin, commissioner of the Financial Crisis Inquiry Commission, said on Bloomberg Television's "In The Loop" that the September report shows the economy is “just holding up - it’s not accelerating, it’s not falling.”

Holtz-Eakin probably sums it up best saying the unemployment rate numbers were “just a fluke” - the figures were a “statistical anomaly” and to “take it with a grain of salt.”


Source:
U.S. Department of Labor
Bloomberg
Wall Street Journal