U.S. Jobs Data: Broad Unemployment Rate Falls Sharply in March

The broad unemployment rate fell sharply to 14.5 percent in March. That is almost three full percentage points below its peak for the business cycle, reached in October 2009. The standard unemployment rate also fell. Its March rate of 8.2 percent was the lowest since January 2009.

The official unemployment rate is the ratio of unemployed persons to the labor force. The broad unemployment rate, which the Bureau of Labor Statistics calls U-6, differs from the standard rate in several ways. In addition to unemployed persons, the numerator of U-6 includes marginally attached persons who would like to work but are not looking because they think there are no jobs. It also includes involuntary part-time workers who would prefer full-time work but cannot find it. The denominator of U-6 is equal to the labor force plus marginally attached workers. Many economists consider U-6 to be a better measure of the number of people who are distressed because of prevailing labor market conditions.

Both the standard and broad unemployment rates are based on a monthly survey of households. Surprisingly for this stage of the business cycle, the March survey showed decreases in the number of unemployed persons, the number of employed, and the labor force as a whole.

The BLS also reports monthly data on payroll jobs, based on a separate survey of employers. The payroll jobs report does not include farm workers or the self-employed. It showed an increase of 120,000 payroll jobs for March, less than in the previous two months. The previously reported February job gain was revised upward by 14,000 jobs, while the January number was revised downward by 9,000 jobs.

The loss of government jobs, which has been a drag on the employment numbers for months, slowed in March. Just 1,000 government jobs were lost in the month. Private sector job gains were broadly based, with manufacturing, health care, and food services among the leaders.

Follow this link to view or download a classroom-ready slideshow of March job market indicators.

The Long-term Labor Market Effects of Drug Prohibition

The U.S. job numbers for March, released today, show moderate, although not spectacular short-term gains: 120 thousand new payroll jobs, unemployment rate down a notch to 8.2 percent. Long-term indicators are less healthy. In particular, as the chart shows, the employment-population ratio fell by 0.1 percent and remains just a fraction above the all-time low it reached last July. Improving that number will require not just fiscal and monetary stimulus, but structural labor market reform. Legalizing marijuana would be a good start. Read more>>>

U.S. Domestic Income Grows Strongly in Q4 2011, Outpacing Growth of GDP

According to the final figures released this week by the Bureau of Economic Analysis, U.S. Gross Domestic Income grew at a strong 4.4 percent annual rate in Q4 2011. Growth of GDI outpaced that of GDP, which was unrevised at 3 percent, itself the strongest of the year. As the chart shows, it was the second consecutive quarter that GDI had grown faster than GDP.

In theory, GDI and GDP are equal, but in practice, the reported data can diverge. Read more>>>

Follow this link to view or download a classroom-ready slideshow of the latest GDP charts

How to Protect Wetlands and How Not to do it: Lessons from Tax Policy

Tax reform is a hot topic. Both Republicans and Democrats say they’re for broadening the tax base, closing loopholes, and lowering tax rates. Bruce Bartlett’s new book is getting a lot of well-deserved attention. So while we’re at it, why not reform implicit taxes, too?

Regulations to protect wetlands, to the extent that they reduce the economic value of affected property, are a prime example of an implicit tax. If they go so far as to reduce the economic value of the property to zero, they constitute a regulatory taking. Under the Fifth Amendment, the government must then pay compensation to the landowner. However, courts have typically found that regulations that serve a public purpose but do not reduce the economic value of a property to zero are not a taking and do not require compensation.
Read more >>>

Please, Secretary Chu, Retract your Retraction. High Gas Prices are Good. You Were Right the First Time.

Why would a president want to bring an eminent scientist like Energy Secretary Steven Chu into government? In the hope, one would suppose, that he would speak truth to power.

Sadly, that hope seems to have been been dashed in the case of Secretary Chu.  In 2008, before becoming part of the cabinet, he had said that as part of the effort to protect the environment and wean the U.S. economy from its energy addiction, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe." But earlier this week, at a hearing of the Senate Energy and Natural Resources Committee, Chu caved to political pressure, saying  "I no longer share that view." Digging himself in deeper, he explained that he and the president felt consumers’ pain at the pump, and were doing everything they could not just to hold the line on gasoline prices, but to reduce them. Read More>>>

US Employment Data: February Jobs Market Report shows Across the Board Strength

The latest report from the BLS shows across the board strength in the U.S. jobs market. Data on payroll jobs, unemployment rates, and labor force participation all showed a gradually strengthening economy.

The headline increase of 227,000 new payroll jobs (233,000 in the private sector) was down a little from the January report. However, that slight decrease was more than offset by strong upward revisions to previous reports. Job growth for December, first reported at 200,000, has now been revised upward to 223,000. January’s number was raised from 243,000 to 284,000, which makes that month’s gain the strongest since May 2010. Read more>>>

Follow this link to view or download a classroom-ready slideshow with charts of the latest employment data

Finally, Proof (Real Proof, not Just Data) of What Inflation has done to Our Economy

Anyone who has ever risked blogging about inflation knows there are two kinds of commenters out there. First, there are those who are sure that inflation, although quiet lately, is poised for a big breakout that will destroy the economy. Second, there are those who are sure inflation has already done so, and that anyone who believes government  data to the contrary is a real sucker.

This post is for the benefit of the second group. I’ve based it on material from a wonderful website, www.wishbookweb.com, that I ran across by chance while doing research for the national accounts chapter of my econ textbook. The site archives full-color, page-by-page images of dozens of old mail order catalogs from as far back as the 1930s. Read more>>>

This post is a sneak preview from the forthcoming 5th edition of Introduction to Economics by Edwin G. Dolan, BVT Publishing