President Obama’s economic advisers hailed the unemployment rate drop last month as a positive sign for the economy, but Federal Reserve Chairman Ben Bernanke reminded observers of the dark side of last month’s jobs report.
“The unemployment decline last month was more than 100 percent accounted for by declines in participation,” Bernanke told reporters today.
President Obama’s team put a much more positive spin on the latest jobs numbers. “While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Alan Krueger, President Obama’s top economic adviser, wrote on the White House website last week.
“The unemployment rate came down last month because the participation rate fell; that’s not necessarily a sign of improvement,” Bernanke explained. “So, we want to see more jobs; we want to see lower unemployment; we want to see a stronger economy that can cause the improvement to be sustained.”The national unemployment rate dropped from 8.3 percent to 8.1 percent, as 96,000 jobs were officially added to the economy but 386,000 people dropped out the the labor force.
“[I]t is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available,” Krueger said at the conclusion of his blog post.