Jobs increase, unemployment lowest in 4 years

[Evo]

This is wonderful news. There has been an upward trend over the past months and looks very good for Obama.

Jobs Report: U.S. Economy Adds 114,000 Jobs In September; Jobless Rate Down To 7.8 Percent

The number of unemployed Americans is now 12.1 million, the fewest since January 2009.

The Labor Department said employers added 114,000 jobs in September. It also said the economy created 86,000 more jobs in July and August than the department had initially estimated.

Wages rose in September. And more people started looking for work.

The revisions show employers added 146,000 jobs per month from July through September, up from 67,000 in the previous three months.

http://www.huffingtonpost.com/2012/10/05/jobs-report-unemployment-rate_n_1942067.html

 

[russ_watters]

I'm having a little trouble understanding what I'm seeing because 114,000 new jobs added is a mediocre/stagnant month and how can 873,000 more people have jobs if only 114,000 were added? In addition, labor force participation rate does not appear to have bottomed-out yet, which helps lower unemployment rate despite a decreasing job market: http://data.bls.gov/timeseries/LNS11300000/

I'm thinking this is going to end up as a statistical blip - fortuitous one for Obama, though because yes, he does need to be below the magic number of 8%.

 

[Pythagorean]

Whenever employment comes up I'm always wondering how different sectors were hit, so I finally looked it up. Plus some other interesting information:

It looks like government, health, and education are the sectors that are doing the best post-recession (for employment).

http://www.huffingtonpost.com/2010/04/05/which-industries-lostgain_n_525504.html

 

[russ_watters]

Interesting, yes, but two years out of date.

 

[Greg Bernhardt]

Good ol Jack
http://blogs.wsj.com/marketbeat/2012/10/05/jack-welch-i-wasnt-kidding/

 

[BobG]

I'm thinking this is going to end up as a statistical blip - fortuitous one for Obama, though because yes, he does need to be below the magic number of 8%.

Being a statistical blip is a given.

The preliminary data always grabs the headlines and the headlines always have a greater impact than they should (even on the stock market, which should be driven by people smarter than the average voter).

The final revised numbers change more often than Tour de France winners and scarcely make the news.

Dropping below the 8% threshold is big "news-wise", but the only thing you can really say is that the unemployment rate is somewhere in the ballpark of 8% - more likely slightly lower than 8%, but basically somewhere around 8%.

People get overly excited about some things. A four-minute mile is actually only a second faster than a 4:01 mile.

The actual number isn't as important as people's perceptions of the future - will unemployment rise or decrease? The GDP suggests we don't have that strong of an economy (but at least it's positive) and the economy isn't getting better, but that doesn't have as big an impact on people's perceptions as the unemployment rate.

Overall, the Consumer Confidence Index gives a better grasp of people's perceptions of the economy than real measurements of the economy. Present situation rose from around 46 to around 50 (which is horrible on a scale where 100 is neutral). But the expectations index rose from around 70 to over 80 (on a scale where 100 is neutral). The expectations index is getting closer to the "re-electable" range. (Bush 43 had the lowest expectations index rating for a reelected President with a rating in the low 90's. Usually an expectations index from 90 to 110 could go either way for an incumbent up for reelection.)

70 is certainly; absolutely has to be unreelectable. But the race was a toss-up even then. 80 is bad, but it's better than 70. You look at economic numbers and you just wonder how Romney could possibly be losing this race? And then progress to "How in the world does a political party manage to nominate someone capable of losing this race?"

I wonder if Romney could have beaten Jimmy Carter?

 

[turbo]

Conn Carroll, of the Washington Examiner, tweeted, "I don't think BLS cooked numbers. I think a bunch of Dems lied about getting jobs. That would have same effect.

The notion that you can get tens of thousands of Democrats to do anything together is beyond belief. It would be like herding cats.

http://www.huffingtonpost.com/2012/10/05/jobs-numbers-republicans_n_1942200.html

 

[Evo]

Good ol Jack
http://blogs.wsj.com/marketbeat/2012/10/05/jack-welch-i-wasnt-kidding/

Yeah, he knows how to "cook the books". I remember Jack's debacle quite well since my husband was on the audit staff and his brother that also worked at GE in executive management new Jack.

Jack Welch Probably Shouldn’t Bring Up Doctored Numbers

Jack Welch, former CEO of General Electric, Romney supporter, and one of our city’s wealthiest men, caused quite a stir this morning when he tweeted that the Bureau of Labor Statistics unemployment rate, which came in at a surprisingly low 7.8 percent, was doctored on behalf of the Obama re-election campaign:

His accusation quickly went viral. It’s got over 2,000 retweets, and it even caused Secretary of Labor Hilda Solis to address the accusation directly. She called it “ludicrous” on CNBC. The Bureau of Labor Statistics puts together its jobs report each month under conditions of crazy secrecy, but even most Republican experts, including those who argue the numbers are an anomaly, didn’t second Welch’s theory that the BLS twisted the process in order to help the president. George W. Bush administration spokesman Tony Fratto tweeted:

"BLS is not manipulating data. Evidence of such would be a scandal of enormous proportions & loss of credibility."

continued...

http://blogs.bostonmagazine.com/boston_daily/2012/10/05/jack-welch-bring-doctored-numbers/

Of course, Rush Limbaugh is foaming at the mouth.

(IMO to *foaming at the mouth*)

 

[lisab]

In the days leading up to the debate, there was a lot of chattering about the national polls being skewed and unfair. Now there's chattering about jobs data being cooked? Hmm. Lots of complaining!

The Economist has a piece about how jobs are measured:

http://www.economist.com/blogs/freeexchange/2012/10/americas-jobs-report

The jobs data are also based on polling. Polls have uncertainty associated with them, they're noisy measurements. Overall the trend is what matters, and the trend looks OK - not great, but OK:

The BLS estimates that in the last 12 months, payroll employment is up 1.8m while household employment is up 2.6m.

(from the link)

 

[russ_watters]

For the record, I noticed the discrepancy myself and make no claim of malfeasance. Indeed, BLS statistics show similar previous blips, such as May-June of 2010, a 516k gain followed by a 167k loss. In Sept-Oct of 1983, the blip is twice as large, but in the opposite direction.

CNN gives some insight as to the reason for the unexpected unemployment rate drop:

In the most recent household survey, the biggest hiring gains came in the form of 582,000 new part-time jobs in September. Part of that number can be explained by young workers, ages 16 to 24. The data show this age group saw a huge pickup in jobs in September, due almost entirely to seasonal adjustments by the Labor Department. [emphasis added]

http://money.cnn.com/2012/10/05/news/economy/september-jobs-report/index.html?hpt=hp_t1

So some of this was apparently purposeful manipulation -- just that it is a type of manipulation that is necessary to smooth out seasonal swings. The trouble with such manipulation, though, is that you have to base it on history and since the current situation is fairly unique, that makes the adjustments somewhat of a shot in the dark. Taking it further: September is when kids go back to school and quit their summer jobs. But teenaged-summer jobs have taken a big hit during this recession, so what I suspect happened is the BLS added a standard correction to counteract the effect of a huge number of teenagers quitting jobs they never had to begin with.

Looking at the timestamps, I was probably writing that first post when that article on Jack was posted, but here's something you'll get first from me: I predict that next month either this blip gets corrected away or corrects itself via a -573,000 job creation month (giving a +150,00 average between the two) and unemployment goes back up to 8.1%.

 

[Jimmy Snyder]

Romney was wrong on this point. Everyone is entitled to their own facts.

 

[Astronuc]

One does have to look behind the numbers or curtain.

Some perspectives:

http://www.marketplace.org/topics/economy/jobless-rate-below-8-candidates-vague-about-jobs-debate

http://www.marketplace.org/topics/economy/could-jobs-statistics-be-rigged

http://www.marketplace.org/topics/economy/employers-behind-septembers-job-numbers

http://www.marketplace.org/topics/economy/unemployment-falls-78-percent-114000-jobs-added

An imbalanced economy
http://www.marketplace.org/topics/economy/ohio-staring-face-change

http://www.marketplace.org/topics/e...s-obama-and-romney-advisers-react-jobs-report

I heard some discussion this morning of people coming off unemployment and taking whatever they could find, even if they can't pay rent or mortgage, or food. College graduates are accepting underemployment in jobs not even related to their degrees. That is clearly unsustainable.

The Federal Budget is a huge chunk of the GDP, and the chronic deficit is as well.
http://en.wikipedia.org/wiki/2012_United_States_federal_budget

For fiscal year 2012 (which ends on September 30), the federal budget deficit will total $1.1 trillion, CBO estimates, marking the fourth year in a row with a deficit of more than $1 trillion. That projection is down slightly from the $1.2 trillion deficit that CBO projected in March. At 7.3 percent of gross domestic product (GDP), this year’s deficit will be three-quarters as large as the deficit in 2009 when measured relative to the size of the economy. Federal debt held by the public will reach 73 percent of GDP by the end of this fiscal year—the highest level since 1950 and about twice the share that it measured at the end of 2007, before the financial crisis and recent recession.

. . . .

So 7.3% of the GDP (and those jobs it supports) are financed with debt.

This next year the deficit may shrink to about $900 billion, but the debt will approach $17 trillion, unless revenues increase significantly and/or expenses are cut substantially.

0.2% decrease in unemployment is not a tumble. It's barely improving.

 

[Evo]

Welch Conspiracy Theory on Jobs Data Not Tied to Reality

http://www.bloomberg.com/news/2012-10-05/welch-conspiracy-theory-on-jobs-data-not-tied-to-reality.html

Fact is this the BLS is how the president has been rated, to suddenly say it's an unfair rating by those that oppose the president because it favors the President is ludicrous. So, should we toss the BLS out and stop using it?

 

[OmCheeto]

http://www.bloomberg.com/news/2012-10-05/welch-conspiracy-theory-on-jobs-data-not-tied-to-reality.html

Fact is this the BLS is how the president has been rated, to suddenly say it's an unfair rating by those that oppose the president because it favors the President is ludicrous. So, should we toss the BLS out and stop using it?

I say we find some mathematical autistic savant, have him look at the numbers, and tell us the answer:

Day 1: 800,000 jobs per month flying out the purple monkeys butt
Day now: 100,000 jobs flying back into the purple monkeys butt

conclusion: we are gaining 900,000 jobs per month.

Ok. Maybe that's the opinion of an idiot-savant...

But it's Friday. Slava bogu.

Do zaftra.

:zzz:

ok to perma ban. I need to work on my windmill poly-hybrid uber-bearings.

 

[Evo]

I say we find some mathematical autistic savant, have him look at the numbers, and tell us the answer:

Day 1: 800,000 jobs per month flying out the purple monkeys butt
Day now: 100,000 jobs flying back into the purple monkeys butt

conclusion: we are gaining 900,000 jobs per month.

Ok. Maybe that's the opinion of an idiot-savant...

But it's Friday. Slava bogu.

Do zaftra.

:zzz:

ok to perma ban. I need to work on my windmill poly-hybrid uber-bearings.

It's obvious, the data is correct when it fits your agenda. So, if they're going to blame Obama when the numbers are bad, based on this information, they can't kneejerk when it's in his favor and say it's unreliable. It's the same process every month. Top finanacial analysts have recently predicted that the unemployment numbers would start dropping to below 8% in the next 2 months and continue to the end of 2013, it just dropped a month sooner than their predictions. So the continued drop we've been seeing has been expected. Will it go up and down a bit although with a continued decline over time? Probably. Still means there is expected to be a continued decline.

 

[russ_watters]

http://www.bloomberg.com/news/2012-10-05/welch-conspiracy-theory-on-jobs-data-not-tied-to-reality.html

Fact is this the BLS is how the president has been rated, to suddenly say it's an unfair rating by those that oppose the president because it favors the President is ludicrous. So, should we toss the BLS out and stop using it?

Who are you arguing against, Evo? Jack Welch's conspiracy theory?? We should not be entertaining conspiracy theory here, even for the purpose of using it as a strawman.

It's obvious, the data is correct when it fits your agenda. So, if they're going to blame Obama when the numbers are bad, based on this information, they can't kneejerk when it's in his favor and say it's unreliable. It's the same process every month.

Except, of course, when the numbers are actually bad. Do you deny the existence of the past "blips" I pointed out? Do you deny the existence of a factual discrepancy in the data from this month?

From your link:

“Like any other enterprise, every now and then you just get a weird number and this one makes no sense.”

Please focus, Evo. We have actual facts and data to discuss here. The data does not make sense, which means it is probably wrong.

 

[SixNein]

http://www.bloomberg.com/news/2012-10-05/welch-conspiracy-theory-on-jobs-data-not-tied-to-reality.html

Fact is this the BLS is how the president has been rated, to suddenly say it's an unfair rating by those that oppose the president because it favors the President is ludicrous. So, should we toss the BLS out and stop using it?

The republican party is a faith based party, and it's running a straight up anti-science campaign. If you think facts matter to them, please get real. They will not be dictated by facts.

 

[SixNein]

For the record, I noticed the discrepancy myself and make no claim of malfeasance. Indeed, BLS statistics show similar previous blips, such as May-June of 2010, a 516k gain followed by a 167k loss. In Sept-Oct of 1983, the blip is twice as large, but in the opposite direction.

CNN gives some insight as to the reason for the unexpected unemployment rate drop: http://money.cnn.com/2012/10/05/news/economy/september-jobs-report/index.html?hpt=hp_t1

So some of this was apparently purposeful manipulation -- just that it is a type of manipulation that is necessary to smooth out seasonal swings. The trouble with such manipulation, though, is that you have to base it on history and since the current situation is fairly unique, that makes the adjustments somewhat of a shot in the dark. Taking it further: September is when kids go back to school and quit their summer jobs. But teenaged-summer jobs have taken a big hit during this recession, so what I suspect happened is the BLS added a standard correction to counteract the effect of a huge number of teenagers quitting jobs they never had to begin with.

Looking at the timestamps, I was probably writing that first post when that article on Jack was posted, but here's something you'll get first from me: I predict that next month either this blip gets corrected away or corrects itself via a -573,000 job creation month (giving a +150,00 average between the two) and unemployment goes back up to 8.1%.

Or maybe the labor market has improved a little bit.

Note: Some people are wondering why there are two such divergent numbers on employment. The reason is that there are actually two job surveys. One is based on asking establishments how many people are on their payroll, which initially covers roughly a third of all payroll employment. The second is based on asking households how many people in their family are working; the sample covers less than 1% of the population. Normal statistical variation guarantees that the two typically produce different results, though this month's difference was larger than usual. In addition, the two define employment differently. If somebody works two jobs, he will be counted twice by the payroll survey but just once by the household survey. The household survey counts domestic workers and the self-employed; the establishment survey does not. When the two diverge, you should put more weight on the establishment survey because of its larger sample size. As I note above, the big gain in the household survey this month in part is payback for unusual declines in the prior two months. That said, variance between the two in the last year has been small. The BLS estimates that in the last 12 months, payroll employment is up 1.8m while household employment is up 2.6m. Most of that gap, roughly 700,000, is due to definitional differences. If you adjust household employment to follow the payroll definition of a job, it's only up 1.9m. So the gap between the two is a relatively slim 95,000 over that period.

http://www.economist.com/blogs/freeexchange/2012/10/americas-jobs-report

 

[Evo]

Who are you arguing against, Evo? Jack Welch's conspiracy theory?? We should not be entertaining conspiracy theory here, even for the purpose of using it as a strawman.

Greg posted it.

 

[JonDE]

From your link:
Please focus, Evo. We have actual facts and data to discuss here. The data does not make sense, which means it is probably wrong.

But the question is, which data? While I will agree that a .3% dropin the UE rate seems unlikely, I will note that I believe that the monthly jobs report will be revised upwards next month. Lately the trend has been for the previous months numbers to be revised upwards, then there was the ADP report, release the day prior, that said the actual number was around 160k. They do payroll for many companies, and base their numbers on actually having to do more payroll.

Also let's not forget that the previous two months numbers were revised upwards by 60k+. So friday, we believe to have 170k jobs more then we thought we had on thursday, which would be more then enough to compensate for workforce growth.

Then there is the secrecy that the BLS refuses to say how they seasonally adjust numbers, they don't even match year to year. Last september the labor force grew by 400k they called it a 103k gain. This year it goes up almost 900k, they call in a 140k gain. So compared to the same time last year the economy adds nearly 500k more jobs and they say it only amounts to 40k more jobs. It seems they used a massively different seasonally adjusting tool last year.

http://www.bls.gov/news.release/archives/empsit_10072011.pdf

http://www.bls.gov/news.release/pdf/empsit.pdf

 

[Evo]

From your link:
Please focus, Evo. We have actual facts and data to discuss here. The data does not make sense, which means it is probably wrong.

Please stop the condescending tone of your posts, it's really inappropriate. If you have any "facts and data" you're welcome to post them.

 

[Vanadium 50]

Here's a "fact and data".

The reported unemployment rate fell by 0.3%.
The number of jobs increased by 118,000.

Therefore, the total number of jobs in the US = 114,000/0.3% = 38 million. Except that the real number is ~5x larger than that. So both numbers cannot simultaneously be right.

I'm not going to speculate on if our how this helps or harms Team-R or Team-D. Just reporting that both numbers cannot simultaneously be right, and that normally such reporting comes with the disclaimer that last months numbers are always highly preliminary and one needs to go back a minimum of 3 or 4 months to get numbers which are reasonably stable.

 

[Maui]

Here's a "fact and data".

The reported unemployment rate fell by 0.3%.
The number of jobs increased by 118,000.

Therefore, the total number of jobs in the US = 114,000/0.3% = 38 million. Except that the real number is ~5x larger than that. So both numbers cannot simultaneously be right.

I'm not going to speculate on if our how this helps or harms Team-R or Team-D. Just reporting that both numbers cannot simultaneously be right, and that normally such reporting comes with the disclaimer that last months numbers are always highly preliminary and one needs to go back a minimum of 3 or 4 months to get numbers which are reasonably stable.

It could be that 0.25% fewer people were looking for work(which doesn't say what happened to them, but the government is no longer considering them unemployed). It's a trick to twist the statistics practiced all over the world.

 

[SixNein]

Here's a "fact and data".

The reported unemployment rate fell by 0.3%.
The number of jobs increased by 118,000.

Therefore, the total number of jobs in the US = 114,000/0.3% = 38 million. Except that the real number is ~5x larger than that. So both numbers cannot simultaneously be right.

I'm not going to speculate on if our how this helps or harms Team-R or Team-D. Just reporting that both numbers cannot simultaneously be right, and that normally such reporting comes with the disclaimer that last months numbers are always highly preliminary and one needs to go back a minimum of 3 or 4 months to get numbers which are reasonably stable.

Maybe your measuring two different things.

One is a survey of employers.
The other is a survey of households.

They also measure different things. For example, one includes self employment while the other doesn't.

http://www.economist.com/blogs/freeexchange/2012/10/americas-jobs-report

 

[Jimmy Snyder]

The reported unemployment rate fell by 0.3%.
The number of jobs increased by 118,000.

The number of working age people increased by x%.

 

[BobG]

http://www.bloomberg.com/news/2012-10-05/welch-conspiracy-theory-on-jobs-data-not-tied-to-reality.html

Fact is this the BLS is how the president has been rated, to suddenly say it's an unfair rating by those that oppose the president because it favors the President is ludicrous. So, should we toss the BLS out and stop using it?

This is true. The previous couple of months were actually better than the preliminary reports, but a President seldom gets credit for the real numbers when they're determined months after the fact. A September headline saying "Obama created 145,000 jobs in June!" just doesn't sound like news - "news" is usually something new.

The numbers have some limitations. Big differences should be news. Small differences don't mean a lot unless you've strung together a few months of small differences in the same direction.

But fair is fair. If you're getting burned by bad headlines based on preliminary numbers, you ought to get to benefit from good headlines based on prelimary numbers and just hope everything balances out in the end. It's a reality of the news business - you need "NEWS!" to get people to read the article in the first place and, if it's good reporting, what that news actually means is included in the article. But the substance rarely carries the same weight as the headline.

 

[russ_watters]

Greg posted it.

Yes, I know. Are you suggesting Greg was forwarding it?, because he clearly was not.

Perhaps we could split the thread so we could have one thread discussing the conspiracy theory and another thread discussing the labor stats?

 

[russ_watters]

This is true. The previous couple of months were actually better than the preliminary reports, but a President seldom gets credit for the real numbers when they're determined months after the fact. A September headline saying "Obama created 145,000 jobs in June!" just doesn't sound like news - "news" is usually something new.

It is refreshing, though, to see the numbers revised up instead of down -- we've discussed here before that they seem to get revised down an inordinate amount of the time. And the upward revision of the employer survey is almost a footnote here: it isn't what the unemployment rate is based on.

The numbers have some limitations. Big differences should be news...

But fair is fair. If you're getting burned by bad headlines based on preliminary numbers, you ought to get to benefit from good headlines based on prelimary numbers and just hope everything balances out in the end.

Yes, big differences should be news -- that's why we're discussing the "weird number" that "makes no sense", according to Evo's economist.

We're also discussing it because unlike most other times, this time it matters.

 

[russ_watters]

Or maybe the labor market has improved a little bit.

http://www.economist.com/blogs/freeexchange/2012/10/americas-jobs-report

I'm not sure what you're trying to say there except perhaps that you didn't read your own link. Could you comment on this from your link please:

When the two diverge, you should put more weight on the establishment survey because of its larger sample size.

 

[russ_watters]

But the question is, which data?

See SixNein's quote:

When the two diverge, you should put more weight on the establishment survey because of its larger sample size.

Also let's not forget that the previous two months numbers were revised upwards by 60k+. So friday, we believe to have 170k jobs more then we thought we had on thursday, which would be more then enough to compensate for workforce growth.

? Uh, no it isn't. 170,000 is a lot less than 573,000!?

 

[russ_watters]

It could be that 0.25% fewer people were looking for work.

Could be, but wasn't. I posted earlier, that the participation rate barely changed (actually ticked up a notch).

 

[OmCheeto]

It's obvious, the data is correct when it fits your agenda. So, if they're going to blame Obama when the numbers are bad, based on this information, they can't kneejerk when it's in his favor and say it's unreliable. It's the same process every month. Top finanacial analysts have recently predicted that the unemployment numbers would start dropping to below 8% in the next 2 months and continue to the end of 2013, it just dropped a month sooner than their predictions. So the continued drop we've been seeing has been expected. Will it go up and down a bit although with a continued decline over time? Probably. Still means there is expected to be a continued decline.

Maybe some of the boomers jumped early.

There are 75 million baby boomers who are on the verge of retirement. For the next twenty years, an average of 10,000 people each day will reach age 65, which has historically been the retirement phase of life.

(ref)

10,000/day*30 = 300,000 fewer people per month working/looking for work.

I know of 3 good acquaintances at work that retired within the last 2 months. This is a much higher proportion than I am used to. What would it do to the numbers if 2 million people retired last month and were replaced by new hires?

hmmm... Perhaps they read the Time Magazine article:

A recent study suggests that there's at least one upside for the millions of beleaguered older Americans among the nation's long-term unemployed: Unlike their working peers, retirement -- officially calling it quits --actually makes jobless workers happier.

(ref)

602 days. But who's counting...

 

[SixNein]

I'm not sure what you're trying to say there except perhaps that you didn't read your own link. Could you comment on this from your link please:

The establishment survey was also revised upward. Current standing is 146,000 avg for employer survey, and 186,000 avg for household survey. As I noted in a post above, households count different things. These numbers will almost always be different.

If you continue reading on down, you'll find:
"As I note above, the big gain in the household survey this month in part is payback for unusual declines in the prior two months. That said, variance between the two in the last year has been small. "So where you attempting to go with all of this found scrutiny of the unemployment numbers? You weren't complaining when it showed unusual declines.

If you want higher unemployment, we'll probably get some towards the end of the year. If congress fails to resolve the fiscal cliff, we might even get to see a global sell off of the labor market since it would likely throw the world back into recession.

 

[JonDE]

See SixNein's quote: ? Uh, no it isn't. 170,000 is a lot less than 573,000!?

Where did you come up with 573k? The numbers usually thrown out are 125k-150k needed each month to keep up with population growth, 170k is more then that.

 

[OmCheeto]

I could spend all day at the BLS playing with their graphs. What fun!

This one is interesting:

Series title: (Seas) Employment-Population Ratio
Labor force status: Employment-population ratio
Type of data: Percent or rate
Age: 16 years and over​

It's been ~29 years since we've had a worker to population ratio this low.
Also interesting is that before 1974, it was never this high.
Also interesting is that the maximum difference is less than 10%.

And comparing the above graph to the following:

Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 years and over​

I've decided there are too many variables to process, and will just conclude that < 8% is a good thing.