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Jobs Number Misleading if You Read Between the Lines

Created: On November 2, 2007 @ 4:16 pm In

By Jim Perez,
DebtHelp, Inc. Staff Writer

In the Bizarro World of Wall Street, where the market goes up on bad news, and good news hurts investors, today’s Labor Department report that U.S. payrolls grew by a net 166,000 jobs, lifted the Dow.

Well, sort of.

The Dow Jones Industrial Average ended the day down 54 points, a paltry drop compared to the 360-point dive the day before.

Labor also reported that the unemployment rate stayed the same, at 4.7 percent, a figure considered low by historical standards.
But of course, this good news is tempered by other data contained in the rest of the report, says Dean Baker, of the Center for Economic and Policy Research.

Baker notes that the employment rate dropped to 62.7 percent, the lowest since June of 2005. He says this drop is especially discouraging, continuing a decline that began at the end of 2006. The employment to population ratio has dropped by 0.6 percentage points over this period.

He continues with the bad news, saying that despite October’s healthy job growth numbers, the private sector has generated an average of just 78,000 jobs over the last three months. Not very encouraging.

And the hourly wage growth has slowed down to an anemic 3.57 percent annual rate over the last quarter. This is down from a rate of more than 4 percent earlier in the year.

Even that 4 percent growth pales in comparison to the real, double-digit inflation that the Bureau of Labor Statistics has hidden in its 24-year shell game.

Baker says these numbers show a weakening labor market, and predicts more doom and gloom on the horizon as the housing market continues its slow, steady death march.

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