Saturday, January 10, 2004

Weak job numbers, a surprise

The Labor Department reported that 147,000 less jobs were created than expected in the month of December. What about the possibility that these numbers are wrong? It is true that initial government numbers are often revised. However, the report also downwardly revised previous month's gains by 66,000 jobs. In other words, if the trend holds even this number may be over-optimistic!

What does this mean? That the economy is more shaky and the recovery more tepid than has been previously thought by optimists. It also somewhat vindicates Paul Krugman's criticism that the recovery isn't as solid as widely thought, though I still disagree with many of his basic arguments. Certainly the nay-sayers who were over-joyed at the recovery and weren't afraid to trumpet it as a success for GWB's policies must certainly be taken aback. The "jobless" economy still marches on.

Technically we're actually "losing" jobs because since demographic trends mean that we need to create "X" number of jobs just to keep with new job-seekers. Failing to grow fast enough means that we're falling behind. Another depressing thought for current job seekers!

NOTE: Here's another source from MSNBC that sites the shortfall as being slightly smaller. The past downward revision is reported 51,000 jobs lower and not 66,000 jobs lower as I suggested above according to this alternative source. Here's relavant quotes from the MSNBC article putting it all in perspective:

“It’s a lousy report any way you look at it,” said David Wyss, chief economist at Standard & Poor’s Corp. “Employment has been up five months in a row, but all five months together add up to about one normal month of growth. We’re just not getting any kind of job growth despite the strength we’ve seen in GDP.”

Another economist that MSNBC quotes adds:

“The popular, man-in-the-street, ground-level view of the job market is that it still stinks,” said Bill Cheney, chief economist for John Hancock. “All of us forecasters were getting a bit complacent, and it turns out the man in the street was probably right.”



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