Why did voters vent? Read the jobs report
Tomorrow you’ll see the reason for American voters’ frustration in clear, hard numbers. It’s time for the heralded monthly employment report.
And if you put me on a spit, hung me over a white-hot fire, tickled my feet and demanded that I make a prediction, this would be it: the employment figures this time around might be slightly better than expected.
But the numbers will be nothing that’ll make Americans second-guess their decisions this week to vote out of office so many of “da bums” — as we lovingly call our hardworking, loyal, conscientious elected officials. Here are some numbers to play with while I roast.
Wall Street thinks that the economy added 60,000 jobs in October. This compares with a loss of 95,000 jobs in September, a figure that was skewed downward by the fact that the last of the Census 2010 workers were still being let go. So 60,000 is the number to beat.
The experts are also expecting the unemployment rate to stay at 9.6 percent, which is where it was in September.
As I’ve told readers, the monthly employment and jobless figures from Washington are not reliable indicators of what the economy is really doing.
These numbers have layers of estimates and assumptions that will be revised for years before an accurate figure is derived. Other private statistical services do a better job at telling us what the economy is up to right now.
So Friday’s announcement from the Labor Department is really nothing more than a guess-the-number exercise, even if some people, meaning journalists and Wall Street traders, seem to take the figures seriously.
There are a number of reasons why this employment number could be better than expected. Faulty seasonal adjustments is one of them.
Mistakes in our economic statistics are even worse right now because the unusual nature of this recession has messed up seasonal adjustments, which are part of the hidden calculations in things like the employment report.
There’s a chance that the Labor Department’s computers are expecting one thing from the patterns of past years, and will get something entirely different. If this happens, it could work in either direction — making the employment number look better or worse than it is. I’ll bet on better.
The second reason Friday’s job growth might be bigger than anticipated is my favorite Labor Department mistake: the so-called Birth/Death Model that is used to predict how many jobs are being created by newly formed companies that can’t be surveyed.
Anyone who walks the streets with their eyes open has probably noticed that there isn’t much net gain in jobs from this type of small company. In fact, it’s likely more mom-and-pop employers are going out of business and laying off workers than starting up.
Nevertheless, the Labor Department will probably add around 50,000 positions to its count this month for these new-company jobs. This is not a huge number. In spring the department adds hundreds of thousands of jobs it thinks but can’t prove are being created by small businesses.
President Obama loves to quote these inaccurate job figures. And, lucky him, that mistake will only be corrected next year.
The third reason the Friday number could be on the stronger side is the election. As I mentioned in October, the Internal Revenue Service changed the status of all the workers who manned the election sites during the primaries and at Tuesday’s general election.
Poll workers had previously been considered independent contractors who didn’t count in the employment statistics. If they are suddenly counted as regular government workers — as the IRS is insisting — this would cause a big jump in the October employment figures.
That’s why I think Friday’s number could be better than expected.
Or, of course, I could be wrong — in which case I will issue a revision to my forecast so far in the future that you’ll never remember my mistake.
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President Obama wants ideas to fix the economy.
He said so himself in a press conference yesterday that can only be described as sober, somber and sadistic — the last one on the part of the media, which repeatedly asked the stunned president the dumbest of deep-thought questions.
Once again, here’s my idea, which is better than anything coming out of Washington because it might actually work and because it won’t cost anything: Change the rules on retirement plans so people can use their money for things like real estate purchases.
This would provide stim ulus to the nation’s stuck economy, which Wash ington can’t do right now because of the budget deficits. It will relieve the foreclosure problem affecting banks. And it will give people who choose to participate in this plan generous tax advantages.
This won’t result in any current day revenue loss for Washington. The plan, in essence, will create a whole new group of buyers that will drive real estate demand.
I dare the president or Congress’ top economic planners to come up with an idea that stimulates the economy, helps the banks, costs nothing and will redefine how recessions are handled from now on.