AUG: +151,000 jobs. Unemployment rate steady at 4.9%. AUG details here!.. Jobs since Obama took office?... Unemp. rate under Obama?

Tuesday, February 12, 2013

What Was the Unemployment Rate When Obama Took Office? (January 2013 update)

March 2013 reports will be released Friday, April 5th.  Check back then!

What was the unemployment rate when Bush left office and Obama was inaugurated? 7.8%

What was the unemployment rate after Obama's first full month in office (February 2009)?  8.3%


What was the unemployment rate at peak?  10.0%

What is today's (January 2013's) unemployment rate?   7.9%





How many people were looking for work when Obama was inaugurated; how many were working?  And how many people are looking for work and how many are employed now?
  • Read below the graph.

  • The following chart shows the unemployment rate in three month intervals plus month-by-month for the latest three months:  








Why are there two lines, one for "Seas Adjusted" and one for "Unadjusted"?

The Bureau of Labor Statistics uses seasonal adjustments to adjust for the volatility in the labor market from one month to the next.  The relatively even red line above shows the unemployment rate based on seasonally adjusted numbers.  The jagged green line shows the unemployment rate based on "real", "raw" numbers; the unadjusted rate.  Notice that the green line goes up in January (after holiday layoffs) and July (school-related layoffs), and it goes down in October and April, which are strong months for workers.  (Employees are all back to school in October, and employers are staffing up for the holidays.  Schools are also full in April and employers are starting to staff up for summer, construction, vacation venues, etc.)  The red line helps us to compare the unemployment rate over a period of months; the green line, however, reflects "reality":  Your friends, neighbors, and family members actually working or not working.  


  • What Caused the Rise in Unemployment When Obama Took Office?  Obama caused the unemployment rate to rise?  (Continue reading; the answer  is below.)
  •  What Was the Unemployment Rate When Bush Took Office?  How high did it rise?  (The answer is also below.)  

The Unemployment Rate When Obama Took Office:
  • For the record, when Obama took office in January 2009, the "official" unemployment rate in seasonally adjusted numbers was 7.8%, with 12,079,000 people reporting themselves as unemployed and actively looking.  142,153,000 people were working in January 2009.*  (These numbers are adjusted slightly since original publication as the Bureau of Labor Statistics updates its numbers.  The original January 2009 unemployment rate reported by the BLS in February 2009 was 7.6%)  
  • In "raw" numbers not adjusted for seasonal variance, the unemployment rate was 8.5% with 13,009,000 people reporting themselves as unemployed and actively looking for work.  140,436,000 people were working in numbers not adjusted for seasonal variance.
The Unemployment Rate at its Peak: 
  • At the "trough" (bottom in terms of jobs) of the recession in late 2009/early 2010, the "official" unemployment rate in seasonally adjusted numbers climbed to 10.0% in October 2009 with 15,382,000 people (out of a labor force of 153,887,000) reporting themselves as unemployed.   138,421,000 were working in October 2009; however, the lowest number of people working was reported in December 2009, when 138,025,000 people (in seasonally adjusted numbers) were working.    
  • In "raw" numbers not adjusted for seasonal variance, the unemployment rate reached a peak of 10.6% in January 2010 with 16,147,000 (out of a labor force of 152,957,000) reporting themselves as unemployed and actively looking for work.  Only 136,809,000 were working (in "raw" unadjusted numbers) in January 2010.

The Unemployment Rate NOW:
  • Now, in January 2013, the "official" unemployment rate in seasonally adjusted numbers is at 7.9%, with 12,332,000 (out of a labor force of 155,654,000, the largest civilian labor force EVER) unemployed and actively looking for work.  143,322,000 people are working now.  (Last month 143,305,000 were working.  This is an increase of 17,000 people working in seasonally adjusted numbers.)  The unemployment rate increased by one tenth (.1%) of a percent as unemployment increased by  126,000 and as 143,000 people entered the labor force in December.  (The unemployment rate actually increased by .07%.) We have 1,298,000 more people in the labor force than we did in January 2012 and we have 1,714,000 more people employed than we did in January 2012.  (The unemployment rate has now decreased 0.4% since January 2012.) 
  • In more volatile unadjusted "raw" numbers the unemployment rate is now 8.5%, an increase of .5% since December, and a decline of 0.3% since January 2012, a year ago.  In "raw" real numbers, 13,181,000 (out of a labor force of 154,794,000) are unemployed and actively looking for work.  This is an increase of 1,337,000 actively unemployed people in raw numbers since December.  141,614,000 are working now in "raw" numbers unadjusted for seasonal variation.  (This is a decrease of 1,446,000 people working since last month.)

To Summarize the Unemployment Rate Now Compared to When Obama Took Office:
  • Using seasonally adjusted numbers, the unemployment rate was 7.8% (and rising quickly) when Obama took office, and it is 7.9% (and even or falling) today.  12,079,000 were officially unemployed back then, and 12,332,000 are unemployed today.  
  • Using nonseasonally adjusted numbers, the unemployment rate was already 8.5% when Obama took office, and it is 8.5% today.   13,009,000 were officially unemployed in "raw" numbers back then, and 13,181,000 are officially unemployed in "raw" numbers now.  Remember that "unadjusted numbers" or "numbers not adjusted for seasonal variation" are the numbers of real people, your friends, family, and neighbors, who are employed or unemployed. 

What Was the Alternate U-6 (U6) Unemployment Rate When Obama Took Office?
(I started to keep track of the U-6 number here in September 2012.  The U-6 number is based on the total of unemployed and underemployed as a percent of the total of the civilian labor force and the underemployed.  The underemployed include two groups of people:  1.  The number of people working part-time who want full-time work but can't find that work.  2.  The number of people who have not looked for work in the past month but are now ready to look for work.  These people did not look for work in the past month for one of these reasons:  Discouragement, sickness, childcare issues, transportation, education or training, "other".  All of these people had looked for work during the past year.)    
  • The alternate unemployment rate when Obama took office in January 2009 was 14.1% based on the most recent revisions available.  By February 2009, it had grown to 15.1%.  (The data reported in February reflects data collected as of the week of February 12th, 2009.) 
  • The alternate unemployment rate (U-6) peaked at 17.4% in October 2009. 
  • The alternate unemployment rate descended to 14.4% in November 2012.  It has been 14.4% for the last three months.

What Was the Unemployment Rate When Bush Took Office in January 2001?  (This chart will be updated in mid-February 2013.)
  • In seasonally adjusted numbers, the unemployment rate was 4.2% when Bush took office in January 2001.  The unemployment rate continued at 4.2% during Bush's first full month in office, February 2009.  6,023,000 people were officially unemployed at that time.    
  • In nonadjusted "raw" numbers, it was 4.7% when Bush took office in January 2001.  6,647,000 people were unemployed in "raw" numbers at that time.  
  • The adjusted unemployment rate went up to 6.3% by June 2003, and then it began to decrease.  That's an absolute increase of 2.1% in 29 months.  That's a relative increase of 50% in 29 months before it turned down.  
  • It went down to 4.4% in late 2006 and again in May 2007, and then began to increase, reaching 7.8%, an increase of 3.3% by the time Bush left office. That's a relative increase of 75% in 20 months.      
  • The unemployment rate went from 7.8% when Obama took office and 8.3% during Obama's first full month in office to the peak of 10.0% discussed above before it turned down.  That's an increase of 2.2%.   That's a relative increase of 28% in 9 months before the unemployment rate turned down.
  • The following chart compares and contrasts the relative increase in the unemployment rate under Bush and Obama during their first 44 months (from inauguration until September of their respective fourth years in office).  The rate under Obama jumped up further in his first year in office, but came down more quickly.  Under both presidents, the unemployment rate comes down and goes up in any 3-6 month period.     









What Caused the Rise in the Unemployment Rate When Obama Took Office?  Why has the Unemployment Rate Increased Since Obama Took Office?

These are questions I have received in my email, and I thought I would answer here.

Well...as just mentioned, the unemployment rate was on its way up with a bullet starting in early 2008. The unemployment rate was 4.4% in mid 2007 before the full impact of the housing crash hit the labor market. Employment in construction hit a max in mid 2006 and had already started down by mid 2007, but most other employment sectors were not impacted. But by late 2007, the entire economy was starting to feel the impact of the housing crash. In a year and a half, from June 2007 until January 2009, the unemployment rate went from 4.4% to the 7.8% discussed above. 

That's why we say that Obama inherited a rapidly-increasing unemployment rate. Why did it continue to rise after Obama took office? It takes a while for any government policy to take effect. Both TARP, the bank bailout signed by Bush in late 2008, and ARRA, the stimulus signed by Obama in February 2009, needed time to take effect, and that simply did not happen immediately. How long does it take to turn around the proverbial aircraft carrier vs. a speed boat? However, even though it took 9 months for the unemployment rate to max out (see the graph above) and start decreasing, the rate of increase slowed down by June 2009.

We can also think of the analogy of a fire: If a building is burning down, the fire department is called. It takes time for the fire department to put out the fire; it takes time for the fire to cool; it takes times for the debris to be hauled away. Only then can rebuilding start. And you certainly don't blame the fire department or the people who clean up the debris for the fire, do you? 

The question, "What Caused the Rise in the Unemployment Rate After Obama Took Office?" really makes no sense... The unemployment rate was rising rapidly before Obama took office, and it took a few months for policies to kick in and stem the job bloodbath. A better question would be "What Caused the Rise in the Unemployment Rate Starting in 2007?" The answer to that would be the housing crisis and the resulting crisis in banks and lending institutions. But that is outside the scope of this article.

What sources are you using for the unemployment data?

All of my employment number reports and graphs are based on monthly reports and data published by the Bureau of Labor Statistics. Monthly numbers reports are based on the monthly Employment Situation Report and Database tables published at the www.BLS.gov website.
The Employment Situation report includes month over month and year over year jobs numbers. 

The database tables that I use for the numbers here are: 
  1. Employment Level LNS12000000 (Seasonally adjusted) & LNU12000000 (Unadjusted).
  2. Unemployment Level LNS13000000 (Seasonally adjusted) & LNU13000000 (Unadjusted).
  3. Unemployment Rate LNS14000000 (Seasonally adjusted) & LNU14000000 (Unadjusted). 

You can find these tables by searching for these table numbers at the BLS website. My analysis is taken from the monthly BLS data copied to an Excel spreadsheet every month. I calculate detailed percentage increases/decreases, 3 month numbers, year to date numbers, and I compare jobs numbers to those at the time of Obama's inauguration and at the "trough" of the recession.

Has Obama Redefined Unemployment?

No. 

No administration can define or redefine unemployment, nor what counts as a job or a worker in the BLS reports.

Changes are made to the questionnaires that are used to determine "employment" from time to time, but these questionnaires have not been changed for years.

My article about the subject is HERE, with links to BLS information about this.



Are independent contractors counted?  What about people who no longer receive unemployment benefits or who have exhausted all of their unemployment benefits?

Someone left a comment:
The one thing none of these reports show nor do any of the Government reports, and that is the number of independent contractors that are unemployed or the number of unemployed that the benefits have run out and they gave up on trying. These added in would make these numbers on the reports look miserable.
Both groups of people, the independent contractors and the unemployed without benefits who are still actively looking for work, ARE included in these numbers.  ALL numbers of people who are unemployed, working part-time, or who want work have come down significantly over the past year to 18 months. 

2 comments:

I appreciate intelligent comments and questions, including those that are at odds with anything posted here. I have elected not to screen comments before they are published; however, any comments that are in any way insulting, caustic, or intentionally inflammatory will be deleted without notice. Spam will also be immediately deleted.