Saturday, February 4, 2012

The Unexpectedly Strong January Job Numbers

Job numbers are of great political and business importance. Voters care whether they or members of their family have a job. Jobs are a measure of community prosperity. Jobs affect company prospects. So the numbers are closely watched. News stories appear beforehand predicting them and afterwards analyzing their implications.

The Bureau of Labor Statistics comes out with these job numbers - the household employment and unemployment numbers and payroll jobs - the Friday after the end of the month for which it reports. This speedy reporting results from (1) using a reporting period at the beginning of the month, (2) utilizing all the state unemployment insurance offices to help process the payroll data to support unemployment insurance filings, and (3) employing the Census Bureau to survey households every month on changes in employment of family members, and (4) efficient processing of the data by the BLS. The speed of reporting helps make the job numbers are crucial source of current data on the economy.

Newspaper editors have a dilemma on the evening before the job numbers come out. They can ignore all the predictions about the job numbers, and appear out of it. Or they can summarize the predictions with a story and headline.

I use the New York Times, my favorite newspaper, as an example. On Friday morning at 8:30 a.m., I checked in to the BLS website for the latest press release (go here for the archived version if you are reading this in March or later) and I find the good news that the unemployment rate is down for the fifth month in a row, to 8.3 percent and employers added 243,000 jobs in January, up from an addition of 203,000 jobs in December.

So in December the U.S. economy was adding jobs at a rate of about one million jobs every five months. In January it was adding jobs at a rate of one million every four months. Clearly, this is hugely good news for Americans and for the President, whose reelection is widely viewed as hinging on better economic news.

Next I turned to my morning New York Times and read a report, by Catherine Rampell ("Stagnant Job Growth Is Expected In Report", Friday, February 3, p. B1) that says that "economists predict ... unemployment stagnating at 8.5 percent," and a "median forecast [of] 135,000 jobs" which is close to the average net gain of 137,000 jobs per month over the previous 15 months. At the predicted rate, it would take the country more than seven months to regain one million jobs, barely enough to take account of population growth and not enough to put many unemployed back to work.

The New York Times headline this morning over a story by Michael D. Shear ("Jobless Rate Falls to 8.3%, Altering Face of Campaign", Saturday, February 4, p. A1) gives the game-changing job numbers appropriate attention. "Economists were surprised by the strength" of the numbers, not only because of the January job growth, but also because previously released 2011 job numbers were revised upward, with the result that U.S. employers are now reported to have added nearly two million jobs (2.2 million private-sector jobs) between January 2011 and January 2012.

The country is not just trending in the right direction, it is moving in that direction at a faster rate.

Michael Shear had a much easier reporting job than Catherine Rampell. It's hard writing a story when you know that by the time most people read it, your headline will be obsolete... or worse. This is a problem for any daily print media.

Is there a solution that would equalize the competition between print and online media? Well, it might be easier on the Times if the job numbers appeared the evening before, say at 8 pm, in time at least to get the headline right. The Thursday evening news would get to cover it. Two problems would remain: (1) The Joint Economic Committee of the Congress, where the job numbers are routinely presented on the first Friday of the month, would have to consider an evening meeting or risk not getting covered. (2) The print media would still face the having to issue predictions a day earlier - for the Thursday editions!