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A Summary of My Post-Employment Tweets

Here is a summary of my post-Employment tweets (@inflation_guy on Twitter):

  • Before any comments about unemployment, a note: it isn’t the NUMBERS that affect the political race, it’s the reality of unemployment.
  • Unemployment rate 7.796% from 8.111% and vs expectations of 8.2%. 114k new jobs, tho weak in private payrolls, +86k net revisions though.
  • According to household survey, 873k more people are employed this month. Uh huh. can you say ‘seasonal adjustment problem?’
  • I doubt there is manipulation in these numbers, but they’re the kind of numbers that make people suspect manipulation.
  • avg hourly earnings and avg weekly hours both a tick higher than expected.
  • In sum, this isn’t a robust report by any stretch (114k new jobs), but it’s better than expected. I expect the unemp drop will retrace.
  • Series I like, “Not in Labor Force, Want a Job Now,” fell to 6.727mm people: still 2nd highest since series started in 1994.
  • As a reminder: people don’t vote the numbers they see on TV. They vote the numbers they see and feel.


The Employment report was good, but not terrific. Any way you slice it, 114k new jobs isn’t going to get anyone dancing in the streets, even with revisions. A quick word to the conspiracy theorists out there: if I was going to manipulate this number, I would do a better job. By monkeying with seasonal adjustments and secondary assumptions, you could produce a much better “new jobs” number. It would require a whole lot of people to be “in on it,” so you might as well get some value out of it, if you’re that kind of sleazebag. So I don’t think there’s any manipulation here, just bad seasonal adjustment.

But more importantly, it isn’t the number that affects the election. People think that because the unemployment rate and the re-election success of the incumbent are related, the former causes the latter. It’s not so. It’s that both are related to a third factor, the actual condition of the labor market. Remember that these are experiments, imperfect estimates of real world conditions. As it turns out, individuals are really good at assessing the state of the job market without any help from the statisticians – they just look at how many of their pals are out of work. So even if this was a completely made up number (or, more likely, just a fortuitous wiggle in the Obama direction), it wouldn’t affect the polls. Thought experiment: if the BLS today had reported 4% unemployment, what would the effect on the election be? The correct answer is zero, because everyone would know that’s not the real unemployment rate.

It’s the same thing here. If the unemployment rate really dropped 0.3% in one month, then it will affect the polls. If it didn’t, it won’t.

Judging from the total of the various employment and activity series we have, I think we have an economy that is still growing slowly, but decelerating and risking a relapse into recession. But we’re not there yet.

  1. October 5, 2012 at 1:11 pm

    From Brian Wesbury and Bob Stein of Northern Trust…who seem to generally agree with your assessment…

    Private sector payrolls were up 104,000 in September versus a consensus expected 130,000. In other words, the sector that beat the consensus in September was the government. Also, on net, all of the upward revisions to prior months were for government; private sector revisions were -5,000. Manufacturing, in particular, looks softer, with payrolls in that sector down 16,000 in September after a 22,000 drop in August. (Only some of this is related to changes in the timing of auto retooling.) So it appears industrial activity, which led the early part of the private-sector recovery, is now losing steam. Also, the huge rise in civilian employment was goosed by part-timers, with a 322,000 overall gain and a 582,000 increase for those working part-time for economic reasons. Although the labor force participation rate ticked up to 63.6%, it is still down from 64.1% a year ago. After last month’s disappointing report, we wrote that “some of the fluctuations in job creation appear to be seasonal….(i)f these patterns continue to hold, expect a stronger jobs report next month.” What’s important, now that we’ve seen the better report, is to not get tricked into thinking the economy is anything more than a plow horse, with modest economic growth and gradual improvement in the labor market. In other recent news on the labor front, new claims for unemployment insurance were up 4,000 last week to 367,000. Continuing claims for regular state benefits were unchanged at 3.28 million.

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