As I suggested on Friday, the jobs report that came out at the end of last week was very good. It was so good, in fact, that the unemployment rate, as measured by the Labor Department, dropped a tick, from 9.5 percent to 9.4 in July. But at the same time, the economy lost another 247,000 jobs in July. So how could the unemployment rate drop?
It's primarily because the ranks of the jobless fell - not because those people found jobs, but because they left the labor force altogether. Most of those people probably got discouraged by their inability to find work and gave up. The labor force, as defined by the Department of Labor, includes only those who are now employed or are actively looking for work.
That's not to say that the July news was bad, or that these figures are cooked in some way. The 247,000 jobs lost in July were down significantly from the 443,000 that were lost in June, and is the lowest monthly figure since last August. So it's a step in the right direction - just not as much of a positive step as that unemployment rate would reflect.
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