Wall Street was expecting 233 thousand jobs were created in June, with whisper-numbers as high as 300 thousand.  When the actual number of 223 thousand were announced, we also learned that our estimates for April and May were over-estimated by 60 thousand jobs.  Economists were disappointed but traders were happy, because a weaker employment picture takes pressure off the Fed to raise interest rates.  Dow futures immediately jumped 50 points.  Pundits labelled the report as a “Goldilocks Report,” because it was neither too hot or too cold.

The unemployment rate dropped to only 5.3%, which is the lowest in seven years.  Conservatives believe that rate is politically motivated and is unrealistically low.  They cite the U-6 level of unemployment as more realistic, because it includes those workers only marginally attached to the workforce and those who are forced to work-part because they cannot find full-time work.  That level was as high as 16.1% in 2009 but had dropped to 10.9% in May and then 10.6% last month.  Either way, the trajectory is improving.

Part of the “numbers-manipulation” hypothesis is not so much the number of unemployed or jobs created but the size of the workforce, which actually decreased by 442 thousand last month.  The Labor Force Participation Rate is the percentage of able-bodied people who actually hold jobs or are looking for jobs.  Normally, it drops during bad economic times, as the unemployed become discouraged and quit looking, but the percentage increases as the economy improves.  Last month, it dropped from 62.9% to 62.6%.

Republicans believe the low Labor Force Participation Rate reflects the fact that high level of entitlements makes people too lazy to work.  Democrats point out that baby-boomers are retiring/dying faster than they’re being replaced.  Interestingly, the ratio of “prime-age” (25-54) workers actually increased.

Most interestingly, the number of job openings has increased from 4.5 million last year to 5.5 million this year.  That is a huge increase.  In normal times, we might find that the jobs and the potential workers are in different parts of the country, which is called structural unemployment.  Recently, a survey of employers documented the biggest problem is the skill gap between what employers need and what applicants have.  The switch from an analog economy to a digital economy has been more traumatic than expected.

While I’m somewhat disappointed with the June Jobs Report, it remains clear that the American economy is still a jobs-creating machine.  But, there is no need to blame the unemployed for not trying harder, when they just need better skills.