Gallup’s chief economist calls BS on last week’s “big unemployment drop”:
While the payroll survey of businesses and government showed just 114,000 net new jobs created, the household survey showed a jobs boom, and it’s the latter which is used to calculate the unemployment rate. [Gallup Chief Economist Dennis] Jacobe:
“The problem is that even though the Household survey tends to be very volatile, this decline seems to lack face-validity, particularly after the prior month’s numbers. The consensus estimate was that the government would report that the unemployment rate was unchanged at 8.1% in September. GDP growth was 1.3% in the second quarter and seems to be no better this quarter. The government’s Establishment survey shows there were 114,000 new jobs created in September — very close to the consensus of 113,000 — and not sufficient to lower the unemployment rate.”
In other words, the numbers aren’t doctored; they’re just invalid.
“A quick comparison of the government’s seasonally adjusted and unadjusted employment data seems hard to reconcile with the weak economy. For example, the government shows the number of employed workers increasing by 775,000 in September from August on an unadjusted basis. This surge in hiring seems surprisingly large given the current economy, not to mention the even larger adjusted increase of 873,000. Similarly, the number of unemployed declined by 954,000 in September on an unadjusted basis. This is reduced to a smaller adjusted decline of 456,000 — but both numbers are also surprisingly large.”
His bottom line: “The Household results should be discounted. … The obvious conclusion is that a new employment measure is needed.”
Now, as Ed and I discussed on the show over the weekend, if the Household Survey was an outlier in September, it’s entirely likely that the next jobs report, due on November 2, will correct it, showing a sizeable jump in unemployment. If that’s the case, it won’t be a jump, naturally – just the numbers returning to where they should have been in the first place.
It’ll be just as dishonest for conservatives to make hay out of that as the liberals are to try to do the same with last Friday’s number.
And I”ll remind conservatives of that fact.
On November 7.