Saturday, December 4, 2010

Are the national employment numbers really all that bad?

The U.S. Bureau of Labor Statistics just released employment situation information for November. All the pundits seem disappointed because the job gains were less than "analysts projections."

It's rather amazing to me that these unknown analysts continue get press when they are wrong the vast majority of the time. You'll notice that when you read about the release of a particular data item it is almost always less or more than analysts projected. Yes, its hard to project even a month's worth of data. But, should we wring our hands because a number came in lower than these phantom analysts (they are never named) predicted. I don't think so. . .but, that is another story.

Is the economy still growing jobs? Yes. Plus, if you use the year-to-year change in employment when analyzing the job market (see this posting for why that's a better indicator), you'll see that the labor market continues to improve. The year-over change in employment for November measured 0.6 percent compared to 0.5 percent in October. The opportunities for employment continue to improve. We're headed in the right direction and making a gradual recovery--which in reality is better than an over-heated boom that eventually results in a "hard landing."

The unemployment rate did show a two-tenths of a point increase. Cause for concern? Maybe. However, remember that it takes two-tenths of a point change to be "significant" at the 90-percent confidence level. And, keep in mind that the unemployment rate is a lagging indicator.

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