Friday, November 05, 2004

Jobs and Unemployment

From the Times:
The economy created 337,000 new jobs in October, nearly double the 169,000 that Wall Street was expecting. The overall unemployment rate rose marginally to 5.5 percent from 5.4 percent.
Note that the unemployment rate has increased, despite the large number of jobs created. From the BLS we find out that while employment increased by 337,000, the labor force went up by 367,000. Since non-institutional population increased by 298,000, this represents maybe an extra 150,000 workers rejoining the labor force. This is at best marginally good news. But the Bush administration is in happy-land:
"There can be no doubt that President Bush's tax relief, combined with good monetary policy, the strength of our small business sector and our outstanding work force, has led to a growing economy that is producing good jobs for American families," said Treasury Secretary John Snow.
Unfortunately, the job gains were probably from "...construction, largely as a result of cleanup and reconstruction efforts in the southeast areas that were devastated by hurricanes, the Labor Department said today." Such gains are only temporary. Arguably, most of the job gains in construction over the past year are only temporary, contingent how long it will take for the reversal in monetary policy to pop the housing bubble.

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