Party with your helmets on!

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People appear giddy with joy that July saw the loss of only 250,000 jobs. Here's how the US News & World Report characterized the news:

"Finally, some good news for the nation's long-suffering job seekers: Employers cut just 247,000 jobs last month, the smallest payroll slice since last August, the Labor Department reported today."

(Not sure myself why finding out that nearly 250,000 people are also now looking for jobs would make the "long-suffering job seekers" so happy...)

Econbrowser's take on the report is not quite as happy, pointing to a key issue with the loss of so many jobs:

"But the problem is, if a traditional economic recovery had actually begun in June (8 weeks after the April peak in claims), the number of people with jobs should have increased in July rather than fallen by another quarter million."

Yes. To Econbrowser, the loss of hundreds of thousands of jobs is a concern, not a celebration. And here's more glumness out of Econbrowser:

"The BLS only counts you as "unemployed" if you both (1) don't have a job and (2) have taken active steps within the last 4 weeks to try to find a job. According to the household survey from which the unemployment rate is constructed, there were 155,000 Americans on net who quit or lost their jobs in July but didn't immediately look for a new job, so those people newly without jobs don't contribute positively to a higher unemployment rate. And 267,000 Americans who reported themselves to be unemployed in June still weren't working in July but had also stopped actively looking for a job, so they're no longer counted as unemployed. That last development is the reason the unemployment rate went down. But given the current environment, it's hardly appropriate to interpret the fact that many people have simply stopped looking for jobs as reflecting an improving economy. Unless we get much better employment reports in September and October than we did in August, the unemployment rate is sure to climb back up.

Rising unemployment could mean more foreclosures and bankruptcies, putting new stress on financial institutions. Calculated Risk notes that even the increases we've already seen put us above the "more adverse scenario" from the recent stress tests."

So Econbrowser's advice? If you're going to celebrate the July jobs report, do so with helmet on. We've not dodged the bullet just yet...

See below for a link to BLS report for July 2009.

BLS July 2009 jobs report

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