After a midterm election in which voters complained of a declining economy, Friday’s jobs report once again proves that the motivation for such discontent is not rooted in economic reality. Well over 200,000 jobs were created in October. This combined with revisions for August and September of over 30,000 jobs has lowered the unemployment rate to 5.8 percent. This is in combination with very strong job numbers over the last six month period. Economic analysts point to this information to bolster their assertions that the economy is gaining significant steam. In addition, the slide in the job participation rate has ceased, and the number of hours on the job is also rising.
There are several theories surrounding critic’s unwillingness to see the economic indicators as positive, and most are purely political. However, there has been a significant stagnation in wage growth, but wage growth is but one measure of a well-performing economy. Most other indices that gauge economic performance are reporting an economic outlook that is increasingly positive. In addition, hourly average earnings have also stagnated and remain around two percent for this year. This metric is only slightly above the rate of inflation. However, this is a net positive because these numbers will cause the Federal Reserve to keep interest rates lower for the near term. Currently, the rates are near zero.
Many critics of the current President point the historically low job participation rate as an indicator that the numbers are skewed, and the “real“ unemployment rate is very high, but the participation rate rose last month. This would normally cause a rise in the unemployment number, but has been allayed by the economy’s good performance. Therefore, this unemployment rate is legitimate under sensible metrics. This claim is bolstered by the fact that the metric for discouraged or part time workers has also decreased by 1.2 million and 1 million, respectively.
This measure was 11.5 percent and that is a decrease of approximately two percent from last year. In addition, this month’s unemployment figures are the lowest since 2008. All these figures point to much more than an improving economy. Economist think that we are now in a period of economic growth that has erased the losses from the economic downturn and is now producing jobs at a healthy rate. This should spur even more discouraged part-time or unemployed workers to seek more gainful employment further reducing the unemployment rate.