Unemployment Gap Remains

Today, the Bureau of Labor Statistics reports an unemployment rate of 8.3 percent for February, which is equal to the rate in January and lower than the rate throughout 2011. Jim Pethokoukis reacts by posting this updated graph that compares the unemployment reality to the promises the Obama administration made when arguing for the $787 billion stimulus package back in early 2009. Pethokoukis points to a 2.3 percentage point gap between the 8.3 percent rate today and the 6 percent rate promised by the administration.

The actual unemployment picture, Pethokoukis continues, is much worse when considering the overall decline of the labor force participation rate. He offers a few adjusted rates to consider:

1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.9% today—the U-3 unemployment rate would be 10.8%.

2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.4%.

3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.5%.

4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.9%.

Read his whole post here.

The White House's reaction to the numbers is rosier, with Alan B. Krueger, the chairman of the Council of Economic Advisers, calling the growth an "encouraging sign" and touting the administration's policies. "Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression," said Krueger in a statement. "It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the recession that began at the end of 2007, including measures to help the sectors that were most severely harmed by the bubble economy that misdirected investment and created too few durable jobs."

Austan Goolsbee, the former Council of Economic Advisers chair and a chief White House economic adviser, cautioned this morning on his Twitter feed that if GDP growth slows, which he said was "likely," that "we probably aren't going to see consistent [numbers] like this."