Never mind that a day earlier, Gallup, which no one would accuse of being influenced by anyone with the Obama campaign, basically predicted the same unemployment rate as the Bureau of Labor Statistics today reported.
Jack Welch is the former CEO of GE and a Romney supporter. This little twit and his tweet got a lot of play in the morning shows, with hacks like Mark Halperin on Morning Joe venerating this scum. And it's still getting a lot of play. The blatant contempt for our career non-political public servants is shamefully apparent from statements like this. But besides the media's propensity to flock to right wing conspiracy theories (birthers, death panels, poll deniars and now, Jack Welch), the only reason the crackpot conjecture has any resonance at all is a misleading comparison between the job growth number of 114,000 which is in line with population growth, and the reduction in the unemployment rate to 7.8%.
The straight explanation for it is this: the rate, which comes from a response to a survey, lags behind the actual work/job creation.
First: count the revisions. And I am not just talking about job numbers revisions for the past two months. I am also talking about the earlier-in-September revision of an additional half-million private sector jobs over the last year (sadly for the conspiracy nuts, that revision too is routine). That revision, when public sector job losses causes by Republicans in state houses and Congress were accounted for, added a net 386,000 jobs to what was previously thought. Now add to that the revisions of the numbers for the past two month's job creation - the July number has been revised up from 141,000 to 181,000 jobs, and the August number has been revised to 142,000 from the previously reported 96,000. That's 86,000 extra jobs in those revisions.
In total, the revisions above count for 472,000 more jobs than we had accounted for previously. Take those into account, plus the fact that this month's jobs number itself may well be due for a revision upward in the next couple of months. Now does that sound enough for a drop in the unemployment rate like we just saw today, as well as why the Household Survey (which predicts the unemployment rate and accounts for startups and self-employment) shows a total 873,000 gain in employment? I know big corporate CEO's aren't interested in actual number crunching, but maybe Mr. Welch can have a look.
There is another way to know that the numbers are, in fact, legitimate. A myriad of indicators over the last month has shown the economy ticking up, and people feeling better about it. As much as I would like to credit the Democratic National Convention's success for people feeling good, the truth is that economic sentiment is hard to change unless the actual economic conditions are changing. Here is just a small sampling of that:
- The Consumer Confidence Index jumped in September to 70.3 from 61.3 in August. That's the highest it has been in 7 months. Something about how when consumers are confident, they spend, and when they spend, demand goes up, which causes businesses to sell more and therefore hire more. But a CEO wouldn't know anything about that.
- From the same report above, home prices are also slightly up.
- More feel that they are better off than four years ago than those who don't.
- The Federal Reserve has made a promise to help job growth for as long as it takes.
- New car sales are picking up.
There has been a flurry of indications in the past month that consumers are growing more confident, and that Americans are feeling better about the economy. That doesn't just happen. This is because their own economic situation is improving. When you aggregate that, you get an overall improving jobs picture. Which is precisely what we're seeing in this month's jobs report.
All of this explanation, though, is only valid if you believe in evidence-based, demand-side economics. If, on the other hand, your economic world spawns from the pixie dust of the graces of the super rich, I readily acknowledge that this may not make much sense to you.
Additional reading and resources on this:
- Ezra Klein at the Washington Post explains why these numbers are no aberration.
- Dylan Matthews, also, at the Washington Post, explains the different surveys and methodologies that BLS uses.
- Steve Benen on the Maddow Blog adds to the conversation.
- Labor Secretary Hilda Solis responds to Republican criticism as well as the numbers: