The Feds reported 243,000 new jobs in January … driving the unemployment rate down to 8.3%
Clear evidence that we’re on a roll, right?
Not so fast.
First, numerous sources have pointed out that another 1.2 million people got discouraged and stopped looking for work. They’re no longer counted as unemployed.
Second, as it does every year, the government revised its statistical methodology for the January report. The BLS footnotes say “As a result, household survey data for January 2012 will not be directly comparable with that for December 2011 or earlier periods.”
Hmmm.
Morw specifically, even the NY Times asks: Is the number real ?
How many jobs did the American economy add in January?
The Labor Department estimated on Friday that the economy gained 243,000 jobs.
The department also estimated that the economy lost 2,689,000 jobs in the month
The difference in the two numbers is in seasonal adjustment.
The actual survey showed the big loss in jobs.
The seasonal adjustments produced the reported gain of 243,000 jobs.
A reason to doubt the number is that there has been a tendency in this cycle for the seasonal factors to overstate moves, in both directions.
If the seasonal adjustment was too large, then the gain should be smaller.
Double hmmm.
That’s why I like to track Gallup’s unemployment estimates. Over time, they’ve seemed reliable and — call me cynical — but, they’re less likely to be subject to political manipulation.
For openers, here’s what Gallup said prior to the government release:
The U.S. government’s January unemployment rate that it will report Friday morning will be based largely on mid-month conditions.
The mid-month reading normally provides a pretty good estimate of the government’s unadjusted unemployment rate for the month.
At mid-January, Gallup reported that its unemployment rate had declined to 8.3%, based on data collected through the 15th of the month.
OK, that squares with the Feds number.
But, importantly, Gallup also notes:
Gallup’s unemployment and underemployment measures show deterioration since mid-January.
While the unemployment rate of 8.6% for January is up only modestly from December, this overall increase subsumes the more negative trend of the most recent weeks.
In turn, this also seems consistent with Wednesday’s ADP report showing less job growth in January than in the prior month.
English translation: Expect February’s unemployment rate (reported first week of March) to bounce back up … unless there’s a flurry of new hiring in early February.
Here’s the data …
Ken’s Take:
Here’s what I said before, and I stand by it !
Pundits have been saying that Obama will be ok with a high unemployment rate in 2012 as long as the trajectory is in the right direction. That is, that unemployment is coming down.
Here’s my scenario: unemployment will creep back up and Obama will be facing a high unemployment rate that is rising.
That’s not good for the O-team.
Politically, Obama might have been better off if the rate had stayed closer to 9% for a while … he may be in the awkward position of having a high unemployment rate that’s going in the wrong direction.
It’ll be interesting …
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