I am sure you have read a lot about this, and normally I don’t focus to much on the national unemployment rate. However this is quite remarkable or questionable. I suspect there is going to be a “revision” to this latest data. If you have been reading my blog for a while you know that I am not a big fan of the unemployment rate methodology – this latest report may be what it takes to change the methodology of calculating the unemployment rate.
“Sept. unemployment rate fell to 7.8 percent due to an extraordinary – but implausible – estimate of 873,000 #jobs in household survey,” said Holtz-Eakin on Twitter.
“The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number,” said CNBC‘s Jeff Cox.
The Washington Post‘s Neil Irwin adds, “Weird that payrolls are exactly on forecast but household survey is far better.”
And the Wall Street Journal warns that these numbers should be taken “with a grain of salt.”
If the unemployment rate number is wrong, I hope it was accidental. I suspect it was and there will be a “revision” later. It may however be that the way the unemployment rate is calculated is now becoming meaningless and we should rely more on the employment to population ratio to better gauge the workforce and employment. One of the big downfalls of the unemployment rate is that it does not include people who have given up looking for work.
Below you can compare the Unemployment Rate vs the Employment-Population Ratio. If the job market really improved both of these data sets would have improved.