27 June 2017

How Not to Be Misled by the Jobs Report

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We obsess far too much on the Labor Department’s monthly jobs report.

Think about it this way: It’s the first Friday of the month, and the Labor Department has bad news: The economy has added a mere 64,000 jobs last month, a steep slowdown from 220,000 the month before. From Wall Street to Twitter, the reaction is swift and negative.

The price of oil falls, as do the prices of blue-chip stocks like General Electric. The Federal Reserve faces calls to push interest rates lower. The lead headlines in the next day’s papers talk of faltering job growth.

But what if all the worries were based on nothing more than random statistical noise? What if the apparent decline in job growth came from the inherent volatility of surveys that rely on samples, like the survey that produces the Labor Department’s monthly employment estimate?

Click here for the full blog post by Neil Irwin in the New York Times.

 

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