Unemployment rate dives, but few new jobs created. How can that be?
Unemployment rate dropped from 9.4% to 9.0% last month, according new Labor Department statistics. But only 36,000 new jobs were created. Where did the rest of the unemployed go?
Economists are scratching their heads over the newly released monthly jobs report.Skip to next paragraph
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The Labor Department announced on Friday that the economy gained only a handful of new jobs in January, but the unemployment rate dropped from 9.4 percent to 9.0 percent, the lowest rate since spring 2009.
Some economists blamed the cold and snowy weather for distorting the numbers, while others suggested the drop in the unemployment rate might reflect people whose unemployment benefits have run out and who have stopped looking for work, thus no longer meeting the government's official definition of "unemployed."
Others pointed out that the Bureau of Labor Statistics (BLS) adjusts its population figures every January, so the new percentage may just reflect that adjustment.
One economist joked that maybe aliens had kidnapped many formerly unemployed workers.
“The more you look at this report – you cannot connect the dots and make sense of it,” says Robert Brusca, an economist at Fact & Opinion Economics in New York and the economist who joked about the aliens. “We just have to wait to next month to see if that makes sense.”
According to the BLS’s survey of establishments, the economy netted only 36,000 new jobs last month, well below Wall Street’s forecast of 145,000 new positions.
“The real issue is the lack of job creation. We know corporations are watching the bottom line and are reluctant to hire new people,” says Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Fla.
This paucity of new jobs runs counter to many private surveys, such as the ADP report and the survey from the Institute for Supply Management, both indicating a strong trend to hire new workers. At the same time, the Challenger Report on January’s layoffs found the lowest level of job loss since the report was begun in 1993.