N.C. Unemployment Rate Drops, But Don't Get Too Excited
In the never ending story that is "so-so" economic news, North Carolina's unemployment rate took a sharp drop in November, but that doesn't necessarily mean there are more people employed.
Here are the numbers up front:
- 7.4% : The N.C. unemployment rate for November
- 0.6% : The drop from October to November
- 2.0% : The drop from November 2012 to November 2013
- 8,101 : The number of people who left the labor force in November
- 20,037 : The number of jobs added last month (based on one survey)
- 6,500 : The number of jobs lost last month (based on a different survey)
Those last two numbers (as you might have guessed) are the most interesting, because depending on which one you accept as the truth, it can flip your view of the economy on its head.
Basically, the state issues numbers based on two studies. One is an in-home study (the Local Area Unemployment Survey... or LAUS). The others is a study of employers (the Current Employment Statistics, of CES). According to LAUS, there are 20,000 more people working this month than last month. According to CES, there are 6,500 fewer people working.
"So, taken in and of itself, the November report is not a robust report for the state," said NC State economist Michael Walden.
Now, for that 8,000 number - the number of people who left the labor force. Walden calls those people "discouraged workers". Essentially, they are people who are giving up. He chalks much of the drop in the unemployment rate up to that number.
The Tar Heel Test Tube
In a fascinating post, JP Morgan's chief economist for North America says North Carolina's unemployment situation is a sort of test case for what will happen when long-term unemployment benefits expire across the country:
In July, the North Carolina government decided to no longer offer extended benefits, even though the state still met the economic conditions to qualify for this federal program. Since July, the North Carolina unemployment rate has fallen 1.5%-points; in the same period the national unemployment rate has fallen 0.4% - point ...
Looks good right? But once you consider the participation rate, things get a little trickier:
Since July the labor force has declined by 0.8% in North Carolina, but fallen by only 0.3% nationally, and the participation rate is down 0.7%-point in North Carolina vs.. 0.4%-point nationally. Over the same time period, employment in North Carolina has grown by 0.8% in the household survey measure and 0.7% in the establishment survey measure; nationally employment is up 0.1% in the household measure and 0.6% in the establishment measure.
Despite the contradictory numbers, Walden, the N.C. State economist, thinks trends bode well for 2014.
"I think 2014 could be probably the best year for our economy that we've seen in the last 5 or 6 years," said Walden. " I'm looking for about 100,000 jobs to be created in the state. Household debt is down. The housing market has finally gotten traction. We're seeing all the housing indicators move forward, and... our exports are booming. So I think that will add strength particularly in the North Carolina economy."