As bad as the October jobs report was – showing an uptick to 7.9 percent in the official unemployment rate, continuing stagnation in workforce participation, increasingly long average unemployment periods, a shift to less career-oriented service sector jobs, and declining median wages – it could have been a lot worse. Many analysts were projecting only 125,000 jobs, which is much less than the official number of 171,000 from the Bureau of Labor Statistics… and even 171,000 is not much better than the monthly job creation needed to keep up with population growth. In fact, the overall average of 155k per month from 2012 is just barely on the edge of stagnancy – a stalemate with demographics, not a “recovery.”
A number trembling just below the headline-toxic unemployment rate of 8.0 percent is a very lucky break for President Obama, especially since the 7.8 percent number from September was widely dismissed as a statistical fluke, driven by an utterly delirious explosion of jobs in the “household survey.” The unemployment report is, essentially, a combination of polls: one from employers, and another from employees (that is, households.)
Like any other poll, these surveys can show statistical anomalies – particularly in the household survey, since employers obviously keep very careful track of hires and terminations on a constant basis, so their survey’s data is based upon firmer data. But it would be inaccurate to rely entirely on employer data or payroll taxes, because many people are self-employed, work intermittently, or are otherwise employed in “grey” areas that don’t show up on the employer survey radar.
On Friday morning, Jim Pethokoukis of the American Enterprise Institute became one of the first big-name analysts to Go There and ask if the October unemployment report is, shall we say, entirely accurate.
Recall all the eyebrows that were raised last month at the huge jump, nearly 900,000 jobs ??? in the September household jobs survey conducted by the Bureau of Labor Statistics. The last time the economy added that many, it was growing at a white-hot 9.3% ??? not 2%. And it was way out of line with the more well known payroll survey.
The results led Gallup???s chief economist to say that the ???household results should be discounted. ??? The obvious conclusion is that a new employment measure is needed.???
But in October we had another mega-month, at least according to that survey. Household employment jumped 410,000.
(Emphasis mine.) 410,000 jobs? Anybody really believe that? Last month’s alleged level of household-survey job creation was consistent with GDP growth three times as high as what we’ve got; this month’s would take double our current rate of growth. Pethokoukis quotes a pair of economists describing the household employment gains reported over the last two months as “implausibly high.”
This is not smoking-gun evidence of cooked books and political hijinks at the Bureau of Labor Statistics. Speaking for myself, I’m always willing to give them a lot of latitude, because it takes a long time to accumulate and process the data they collect – they’re really still working on it for six to eight weeks after each month’s official numbers are released, but our relentless news-cycle-driven hunger for data would never tolerate leaving them alone until December to get final, rock-solid numbers for October. But these incredible numbers from the household survey are very curious, and curiously timed. It’s not surprising that questions are being asked. Perhaps the Labor Secretary should stop giving out candy to celebrate rising unemployment, as she did this morning, and give out some answers instead.