North America: Economics: US unemployment drops to 4.7% - Canada jobless edges up to 6.6%

In the first week of February, the US unemployment-rate statistic dropped to 4.7% of the American workforce, while the unemployment rate for Canada climbed a sliver from 6.5% to 6.6%. Statistics Canada reported in its most recent Labour Force Survey that

Employment increased by 26,000 in January following a pause the month before. Although employment increased, the unemployment rate edged up 0.1 percentage points to 6.6% as more people entered the labour force in search of work.

Perhaps it's most important to note that "employment increased," but just not fast enuff to supply sufficient jobs to the number of new people joining the workforce.

In the US, according to Tom Abate of the San Francisco Gate / Chronicle, unemployment rates were the lowest in more than four years. Of course, the Bush Administration assigned this phenomenon to its foresight and stewardship, "noting that January's 4.7 percent jobless rate -- down from 4.9 percent in December -- was lower than the average unemployment rate that prevailed during the 1970s, 1980s and 1990s." So, statistically speaking, it did indeed have at least a little something to crow loud about, while "critics said the rate is low because millions of Americans have dropped out of the labor force." Were that true, and it may well indeed be, still the critics jibe must take into account the nicetie of thawt that we're talking in all cases here about the offical labour force as reported by the Federal government's Depart of Labour. We are not talking about the total labour force which includes all under-the-table work and remuneration, into which sector those dropping out of "the labour force" may have simply moved horizontally from the official to the unofficial labour force.

New Federal Reserve Chairman Ben Bernanke will have to weigh these opposing views before the March meeting, at which Fed officials must decide whether to continue a string of 14 increases that has brought the baseline interest rate to 4.5 percent.

Perhaps a little info on the concept of the baseline interest rate would help here, and the excellent summary I found comes from the Bank of Canada's Monetary Policy which of necessity in reaching its own determination must take into account parallel developments and differentials in the US. The policy structures the updating of the baseline interest rate according to four criteria: 1.) Risks and alternatives; 2.) Regional survey and forecast; 3.) Review of indicators of inflation and capacity pressures and 4.) Financial market expectations. I'll cite here just some of the text for the first item:

About a week before the announcement [of a new baseline interest rate, or of a continuance with the one that presently prevails], the Governing Council [of the Bank of Canada] is briefed on four important topics:

Risks and alternatives

The staff projection is an outlook for the economy's most likely path. There is, of course, much uncertainty around this outlook, and the economic model is used to assess the main "risks" to it.

Examples of risks include different assumptions about the current amount of slack in the economy or the growth rate of economic capacity; different assessments of the prospects for the U.S. economy; and alternative views on the future path for the price of oil or other commodities. The staff's "risk analyses" assess the sensitivity of the baseline forecast to such risks and provide the Governing Council with a range of forecasts and policy recommendations.

The staff also consider alternative policy scenarios; for example, one in which interest rates are held constant for a period of time. This would indicate the consequences of delaying the interest rate response proposed by the model.

As well, staff review various indicators of capacity pressures and inflation

When you go thru all four of the factors, you begin to realize that all of them influence the number of jobs that will be lost and created in any given period of time, and thus the baseline interest rate, to the best of the Bank's ability to predetermine a specific rate policy and possible change thereof. But jobs, as such, depends on the both the official and unofficial labour markets of businesses (legal or not). That's one reason why the government always wants to create new jobs under government control, regulation, taxation, etc. It's one reason why the government wants to control all education, and all education-related jobs. That's one of the key reason's the previous government wanted a national childcare program in official childcare facilties (where the Canadian Union of Public Employees would unionize them, put them on strike, chechoff dues not just for the union but for the unoin's causes, etc.) This tendency has precious little to do with the well-being of children or assuring to parents the best choice of childcare as each family may envision it. Usually, informal and unofficial childcare by grandparents and other relatives doesn't enter into the statistics of official employment, but the bit of money or other benefits, say, of a grandparent living in the home with the children and parents serves the well-being of all - including the grandparent/s involved. - Owlb