Ahh, about that Labor claim of only 1000 jobs in Dec...well, maybe they need new jobs cause it looks like the job gettin' is gettin' good!
The fact is, the recent payroll data are giving the wrong impression of the strength of the labor markets. It has happened before, especially during the early stages of the recovery from the 1990-91 recession. Back then, the payroll numbers significantly understated how fast the job markets were recovering, a fact underscored by subsequent revisions.
"To be blunt, we do not believe these data," says Brian S. Wesbury, an economist at Griffin, Kubik, Stephens & Thompson Inc.
Like most economists, Neal Soss at Credit Suisse First Boston (CSR ) ordinarily gives more weight to the payroll numbers because it is a larger survey and, after all revisions are in, it tends to track job trends better. "But given all the other evidence, it's possible -- and we are inclined to believe -- that the payroll numbers are understating job growth," says Soss.
But how, how, how could this happen when ALL the Dems jumped in the deep end citing this as fact?
The Labor Dept.'s other measure of job creation, which is based on a poll of some 60,000 households, may be closer to reality right now than the payroll survey. The household survey shows job growth in the second half of 2003 averaging a healthy 134,000 per month, vs. a paltry 37,000 for the payroll survey. And during the most recent four months -- even after removing self-employment and other areas from the household-employment data to make the two head counts line up conceptually -- monthly job growth in the household data has averaged a sturdy 229,000 per month, vs. just 61,000 for the payroll data.
And as the lefty wheels begin to turn in the search for grim news to make them happy, there's this gem...
During that same period, the labor force, comprised of both employed and unemployed workers, held about steady, implying that the decline in the unemployment rate, to 5.7% by December, was mostly genuine and not the result of people dropping out of the labor force.
Whoops, maybe Krugman was referring his fellow employees at Enron "dropping-out" of the civilan labor force.
One big problem is that the payroll number has a history of miscounting jobs when the economy is at a turning point. Eventually, the Labor Dept.'s revision process, which can take years, catches up to reality. But the miss can be enormous. In the second year of recovery from the 1990-91 recession, for example, payrolls were said to have increased by just 300,000. After more complete information came in, especially from state records and tax reports, the data had been revised to show that 1.6 million jobs were added. Even by the third year of that recovery -- the point the U.S. economy is at in this one -- job growth was originally estimated at 2.2 million. Today, the revised number stands at 3.2 million.
My, my, my what bullets to shoot at W now?