You didn’t have to look far today to find varying takes on the yesterday’s employment news. They varied from the jubilous to tempered caution to a review that explains away all of the positive data.
The usually David Leonhardt writing in The New York Times used the report as a jumping off point to paint a picture of a recession fading in the rearview mirror. His piece seeks to paint the Obama economic policies as the impetus for leading us to sunlight. Along the way he uses the much discredited concept of “saving” jobs and the bank stress tests to bolster his arguments. To his credit, he does concede that circumstances are still extraordinarily difficult and there may yet be challenges to face.
Paul Krugman explains well the dichotomy of a falling unemployment rate and a continuing loss of jobs. He ends his post by noting that we are not out of the woods just yet:
Basically, though, what you need to bear in mind is that these are imperfect measures, subject to a fair bit of noise. When the trend in the labor market is very strong in either direction, the measures move together. But when you have the kind of scene we have now — the employment situation is drifting down, but not plunging — occasional mixed signals are likely. No big deal.
The basic story is that things are sort of stabilizing — but they’re definitely not improving yet.
James Pethokoukis at Reuters is the bear of the group. He cites four reasons that the report was worse than it appeared. In his view, the auto sector screwed up the seasonal adjustments, the federal government was on a hiring binge, weekly earnings popped up because of a lot of auto workers coming back to work and the increase in the minimum wage and the decline in the unemployment rate was a statistical fluke. Here’s what he says about the unemployment rate:
To be sure, the drop in the unemployment rate was a surprise, but it was all due to the slide in the labour force — the employment-to-population ratio gives a more accurate picture of the slack in the labour market and the hidden secret in today’s report was that this metric slid to a 25-year low of 59.4% from 59.5% in June and 61.0% at the turn of the year. Of those unemployed, 33.8% of them have been unemployed now for over 27 weeks — a record amount (was at29.0% in June and was at 17.5% at the start of this recession).
Take your pick. For me, I think that one month’s worth of data is just too skinny. If there were some discernible trends that would make a difference but the monthly number of jobs lost keeps jumping around and Pethokoukis makes some good points about the noise in those numbers.
The cliff dive may be over but I think it’s far from clear that we are even not getting worse.