What is Romney’s strongest argument? It’s that he, as a successful businessman, knows how to create jobs. He scored on this point in the debates.
Obama has gotten such a thrashing over his inability to debate Mitt on these points that he’s in trouble.
Enter the jobs number reported on the first Friday of each month. What better way to take the rug out from under Romney than to have a really fantastic number come out.
So, what do we get this morning? A drop in the unemmployment rate to a shocking 7.8% from 8.1%. Economists had actually predicted a bump up to 8.2%. What a coincidence! The unemployment number announced today is the same number as when Obama came into office. How extraordinary.
But, the number of jobs created was just 114,000. How do you get a drop of .3% – a quite big one – with so few jobs added? Hmm?
We already noted the absolutely stunning surge in reported Household Survey jobs which “added” 873,000 jobs, or the most since 2003 and the second most in the past decade, which was just a little bit off the Household Survey used in the monthly NFP jobs changes, which came at 114,000, or about 8 times less. But what was the reason for this epic jump in Household survey jobs? Simple, and those who have read our series on America’s transition to a part-time worker society know the answer. The reason is that the number of part-time people employed for economic reasons soared by 582,000 to 8,613,000, the most since October 2011, and the largest one month jump since February 2009, when “restoring” confidence in the economy was all the rage… and just before the Fed announced the full blown QE1 in March of 2009. Odd symmetry.
For every job created in September, exactly 3 people abandoned the workforce entirely.
However, the number of unemployed dropped 456,000 last month, while only 114,000 jobs got added. That either means that 342,000 people left the US, or they left the work force in one way or another.
Yeah, this doesn’t smell right. The household survey (the part used to calculate the unemployment rate, not official payroll growth, which comes from the establishment survey) shows a whopping 873,000 jobs added in September (seasonally adjusted).
How whopping? It’s the best month of the millennium to date.
In fact, it’s the best month since 1983 (excluding Januarys, which usually show crazy numbers, due to annual revisions, which is why they’re removed from the chart).
That’s just not remotely plausible. In the last 29 years, we’ve had 22 quarters of growth exceeding 5%. And never did the household job creation rate hit the ostensible peak we just experienced, with growth hovering in the 1-2% range.
We’ve either got a massively massaged seasonal adjustment in place, a drastic change in household survey methodology, or the number is real, the economy is booming, and ADP undercounted by 700,000.
If it’s a change in methodology, it may be in how they count (or adjust for) the number of part-time jobs.
The number of people with part-time jobs who wanted full-time work rose 7.5 percent to 8.6 million, the most since February 2009.
That skyrocketing of 600,000 is the not too far from the discrepancy between the household (+873k) and establishment (+114k) surveys.
Labor Secretary Hilda Solis was on CNBC a few minutes ago defending the household survey and its attempts to capture various flavors of self-employed that the establishment survey misses.
Maybe DOL is taking a cue from Obama’s welfare work requirement tinkering, and redefining self-employment to include things like motivational reading and making your bed.
Then we have more from economist James Pethokoukis says:
The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.
The shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress?
The 114,000 jobs created would have been a good number … but for 1962, not 2012. The U.S. economy needs 2-3 times that number every month to close the jobs gap (which is the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.) At 114,000 jobs a month, the jobs gap would not close until after 2025, according to the Hamilton Project.
We are still on pace to create fewer jobs this year than last year. In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011.
Reports from the floor of the New York Stock Exchange say that no one believes these numbers. Jack Welch, former GE head honcho tweeted his skepticism: “Unbelievable jobs numbers…these Chicago guys will do anything. Can’t debate, so change the numbers.”
It’s a different kind of October surprise, but it definitely is one. Probably more are on the way. Our government has sunk to a level so low, most of us don’t believe them anymore.