US jobs: The drop in the headline U.S. unemployment rate to 9.7 percent is not what it seems. Other data were revised to show that 1.2 million people more than thought have lost their jobs in this downturn. Seasonal tweaks may have been overdone, too.
Revisions to employment data sharply increased the tally of jobs lost since November 2007 to an estimated 8.4 million. That makes the downturn four times as severe as any postwar recession in terms of jobs lost. Of particular concern is the continued rise in the number of people unemployed for more than 26 weeks to 6.31 million in January.
At 4.1 percent of the workforce, that too is higher than in any other postwar recession. The potential for long-term unemployment problems was underlined by another increase in the number of workers who have ceased seeking employment -- a figure that rose to 1,065,000 in January from 929,000 a month earlier.
Seasonal adjustments flattered Friday's jobs data, too. Unadjusted, 944,000 non-farm jobs were lost in January, the vast majority in the construction and retail sectors. But seasonal adjustments reduced the losses to 20,000 overall. Since both those sectors were depressed in 2009 and seasonal tweaks are based on prior years, the adjustments for January were almost certainly too large.
In the other part of the Bureau of Labor Statistics' report, the unadjusted unemployment rate rose to 10.6 percent, with seasonal adjustments delivering the superficially cheering drop in the headline figure.
The reality is that U.S. unemployment is setting new postwar records in scope and duration. Things do not appear to be improving significantly despite the return of economic growth, which registered quite strongly -- if perhaps unsustainably so -- in the fourth quarter of 2009. The recovery remains worse than jobless so far. That may eventually turn around, but even after that happens the scars of protracted unemployment won't easily disappear.
