Dennis Jacobe, Gallup's chief economist, puts his finger on the problem with last week's upticked job numbers: nobody buys them.
This blog mentioned in mid-September that it was possible -- if unlikely, based on Gallup's survey data that include 30,000 interviews per month -- that September's seasonally adjusted unemployment rate could fall to 7.9%. Still, Friday's BLS report of a drop to 7.8% in the Household survey seemed to surprise everyone, as has been the case on many occasions this year.
The problem is that even though the Household survey tends to be very volatile, this decline seems to lack face-validity, particularly after the prior month's numbers. The consensus estimate was that the government would report that the unemployment rate was unchanged at 8.1% in September. GDP growth was 1.3% in the second quarter and seems to be no better this quarter. The government's Establishment survey shows there were 114,000 new jobs created in September -- very close to the consensus of 113,000 -- and not sufficient to lower the unemployment rate.
That still leaves us with a problem. But unlike most economists, Jacobe offers a pretty interesting solution:
The obvious conclusion is that a new employment measure is needed. Gallup has proposed such a measure -- Payroll to Population (P2P) -- the number of Americans employed full-time for an employer as a percentage of the U.S. population. This is a much simpler measure that has none of the numerous adjustments made to the seasonally adjusted unemployment rate. TheP2P deteriorated slightly to 45.1% in September from 45.3% in August, suggesting the real jobs situation was essentially unchanged last month.
Imagine that. A simpler, clearer way to measure unemployment. And one that has, in my favorite weasel-word of the day, "face-validity."
And that's really the problem, isn't it, with the Obama administration's claims? They have no "face-validity."