U.S. Jobs Report Skepticism: As Good As It Gets?

Feb 3, 2012 3:01pm

January’s jobs report released Friday morning showed that unemployment fell to 8.3 percent as employers added 243,000 jobs, but there are concerns the numbers may be as good as it gets. There is still a long way to go before the country’s labor situation returns to pre-2008 levels.

The unemployment rate had its fifth straight monthly decline but long-term unemployment, those jobless for 27 weeks or more, is stuck.  That figure was mostly unchanged at 5.5  million and accounted for 42.9 percent of the unemployed.

The economy must add about 200,000 to 250,000 jobs every month to get the unemployment rate down below 8 percent.

Peter Morici, professor at University of Maryland’s Smith School of Business and former chief economist at the U.S. International Trade Commission, said unemployment is not likely to fall much further and could rise again.

“Fourth quarter growth was stronger as the global economy recovered from first-half disruptions such as the earthquake in Japan, but going forward economists expect growth to slow to about 2 percent,” he wrote in a comment about the report.

The adult labor force participation rate remained steady at 63.7 percent, indicating the unemployment rate decreased because new jobs were added. In January, working-age adults not participating in the labor force–those neither employed nor looking for work–increased by 88,000.

Morici said many adults have quit looking for work altogether so the unemployment rate should be higher.

There is additional skepticism about the nation’s jobs data. Two different surveys used by the Labor Department to collect data raise questions about how many jobs were really added in January, the Wall Street Journal reported. Also, every January, the Labor Department re-adjusts its data to account for population changes.

Steven Leslie, lead analyst for financial services at the Economist Intelligence Unit, said every January the economy loses a significant number of jobs, often because stores and shippers lay off the extra hands brought on for the holidays.

The seasonal adjustments by the Bureau of Labor Statistics (BLS) attempt to strip out this effect. But because the behavior of employers and employees varies over time, adjustments based on patterns in the past may no longer be correct, Leslie said. Moreover, the BLS have this time made additional adjustment for recently received population estimates based on the 2010 census figures.

“That said, there is no reason to doubt the BLS statisticians who are civil servants following a complex, but transparent approach to calculating and publishing the numbers,” he said.

ABC News’ Lyneka Little and Zunaira Zaki contributed to this report. 

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