What's In A Number?

The latest unemployment figures are in:

The unemployment rate rose from 5.7 to 6.1 percent in August, and non-farm payroll employment continued to trend down (-84,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. In August, employment fell in manufacturing and employment services, while mining and health care continued to add jobs. Average hourly earnings rose by 7 cents, or 0.4 percent, over the month.

The data sheet lools like this. There are a few things going on:

1) The civilian labor force in JUL 08 was 154,603,000 .
2) The civilian labor force in AUG 08 was 154,853,000. This is an increase of 250,000 workers or 0.2%.

3) The number of unemployed workers in JUL 08 was 8,784,000.
4) The number of unemployed workers in AUG 08 was 9,376,000. This is an increase of 342,000 or 6.7%.

5) The number of employed workers in JUL 08 was 145,819,000.
6) The number of employed workers in AUG 08 was 145,477,000. This is a decrease of 342,000 or 0.2%.

The last time the unemployment rate was this high (6%) was in 2003 when there were:
8,774,000 unemployed
137,736,000 employed
146,510,000 in the civilian labor force

This means that in the past five years (raw data):
The number of unemployed increased by 6.9% (+602,000)
The number of employed increased by 5.6% (+7,741,000)
The civilian work force increased by 5.7% (+8,843,000)

Of course if you are one of the recently unemployed this means nothing to you. But some, if not much of this may be due to the housing speculation bubble bursting because of sub-primes. Home construction is down as per this:

• Developments in financial markets in the second half of 2007 and early months of 2008 have undermined rather than contributed to recovery in the housing sector. Housing sector activity has been depressed by an additional 30 percent due to the credit market crisis.

• Single family housing starts are down 63 percent from peak levels of production during the housing boom with some of the most troubled markets down 80 percent or more.

• The toxic combination of lax lending standards and stagnant or declining house prices in many markets creates the potential for downward spirals with resetting mortgage terms and declining prices forcing foreclosures that depress prices further forcing additional foreclosures.

• The most troubled markets are in Florida and California, and include Las Vegas and Phoenix, AZ, but the twin problems of inflated house prices and questionable mortgage lending are not isolated.

• Housing markets across the country will experience another difficult year in 2008 before recovering in 2009. Recovery will be uneven with some of the most troubled markets declining through 2009.

• Markets in the Northeast and South, with the notable exception of Florida, will recover ahead of markets in the Midwest. The industrial states are at greater risk of continued weakness than the farm belt, and the Western markets in Las Vegas, Phoenix and California will be the slowest to recover.

Mortgage companies that provided loans to under qualified or over extended home buyers was a real bad mistake. You cannot loan billions of dollars to people who are at risk of defaulting on those loans. Also responsible are the investors, borrowers and the rating companies - everyone got greedy.

As a result of this, employment in the construction industry is down by 28,000 jobs in the last three months alone (June to August) this year. In comparison, government jobs increased by 23,000. What sense does that make?