Obama’s spin machine is up and running. He’s back to using his established tactics…like continuing to fudge the unemployment reports. The Drudge headline this morning was “7.8” implying the unemployment rate dropped from 8.3 last month to 7.8 this month. As usual, it’s misleading.
There are two numbers, the U3, the 7.8 number mentioned above, and the U6. The difference between the two is dramatic. The U3 number is a result of a survey of households. It excludes those who work part-time. It excludes those who are no longer receiving unemployment because they’ve run out for that household. It does not include farm-related job losses. The U3 measures the change of those in the unemployment system. Those just beginning to receive unemployment and those who are ceased drawing unemployment. The assumption of the latter is that if you’re no longer drawing unemployment, you’ve found a job!
The U6 is different. It’s more commonly known as the “true” unemployment number. Last month is was in the mid-teens. It includes all those that are in the U3 and those excluded by the U3. The U6 remained essentially unchanged from last month.
There is an additional number that is released with these reports. The size of the labor force. That number has been steadily dropping since 2001. If the labor forces continues to shrink and the numbers of unemployed remains the same, the percentage of the unemployed increases. The U6, if I understand the formula correctly, incorporates the size of the labor force. The U3 does not. You can find a better explanation on the U3 and U6 here.
So. What does this new “low” number mean? Not much. If this number follows the trend established since Obama took office, it will be revised upward next week, and the following week—as will the quarterly numbers. It’s a well established pattern. Throw out some number to make Obama look good, then when the public’s attention is elsewhere, release “corrections.”
This should be no surprise to anyone after Obama’s abysmal performance in the first Presidential debate. He has to do something to divert attention from his performance. You can bet nothing damaging will be released until after the election in a few weeks.