The Labor Department said Thursday that initial claims for jobless benefits dropped last week by 10,000 to a seasonally adjusted 453,000. Undoubtedly, the Obama administration will hail this latest report as a sign that the US economy is recovering. However, it's important to note the following:
The recent drop in jobless claims is only due to the fact that there was a sharp increase in jobless claims three weeks ago.
Here's the real deal: In the week ending May 15, the Labor Department reported that initial claims for jobless benefits had risen to 471,000, an increase of 25,000 from the previous week's figure of 446,000. Which means there were 446,000 jobless claims in the first week of May and, as of last week [as noted above], there were 453,000 jobless claims - that's an increase of 7000. The numbers appear to be dropping now only because of the sharp increase that occurred in the week ending May 15. In fact, the Labor Department, in its report on Thursday, noted that "the 4-week moving average [of jobless claims] was 459,000, an increase of 1,750 from the previous week's average of 457,250."
But more importantly, as Business Week points out, the Labor Department on Friday is expected to report that the economy added 513,000 jobs in May, but as many as 300,000 of those positions are expected to be temporary Census positions. Or, as one commentator put it, "much of that expected gain is due to workers hired to perform the once-a-decade census who will lose their jobs in the second half of the year." What's more, according to CNBC, some economists have raised the number of census workers in their forecasts from 300,000 to 450,000 [and estimated private sector payrolls at 150,000].
But of course, Census positions are not the only kind of temporary jobs out there. Thus, the question arises: How many of the remaining jobs, added in May, other than the census jobs, are temporary and how many are permanent? How many are part time and how many are full time? According to the Labor Department's website, "people are considered employed if they did any work at all for pay or profit during the survey week. This includes all part-time and temporary work."
And so, while the White House on Friday will no doubt hail the Labor Department's report as a sign that the US economy is recovering, this, like all the other rhetoric emanating from the White House, is nothing more than hot air - just the usual spin.