While Wall Street and the Obama administration were greatly disappointed in the 80,000 new jobs added in June and the seasonally adjusted unemployment rate remaining at 8.2%, the unadjusted BLS results show an even bleaker employment picture.
According to the BLS Household Survey, on an unadjusted basis, the number of unemployed Americans increased by 913,000 in June. At the same time, the number of employed Americans increased 475,000 as the total workforce increased by 1.4 million. As a result, the unadjusted unemployment rate increased to 8.4% in June from 7.9% in May and the participation rate increased to 64.3% from 63.8%. In sharp contrast, the government's seasonal adjustments produced an unemployment rate of 8.2% in June -- unchanged from May -- and also left the participation rate unchanged at 63.8%.
In sum, the BLS unadjusted results show a much more serious and worsening jobs situation than implied by the seasonally adjusted data. In turn, the government's unadjusted unemployment data increases the odds that the Fed will try to flood the financial system with even more liquidity -- so-called quantitative easing (QE3) -- and something that should be a positive for Wall Street. The unadjusted results also suggest the U.S. economy is slowing further -- from its anemic first quarter growth rate of 1.9% -- erasing any lingering doubts that jobs and the economy will be the central issue in this year's presidential election.
Although Gallup's unadjusted unemployment rate tends to trend with that provided by the BLS, upon occasion, the two have diverged at various points in the past year. Gallup's unadjusted rate for June is 8.0% -- unchanged from May -- and much better than the government's 8.4%. Regardless, given the other signs of economic weakness, neither Gallup's nor the government's unemployment numbers provide much reason for economic optimism.
