Current Weather
The Spy FM

What Does The Jobs Report Really Say?

Filed by KOSU News in Business.
February 1, 2013

What’s today’s big jobs report say?

The U.S. economy lost 2.8 million jobs jobs in January.

What?!

Don’t panic. The U.S. economy loses millions of jobs every January, in good times and bad, largely because tons of seasonal holiday jobs always wind down after Christmas.

So if you set aside the normal, seasonal stuff, how is the job market doing?

The wonks who write the jobs report can answer that! They look at the typical, seasonal things that happen every year, do some math, and come up with a seasonally adjusted number. This is the number that gets widely reported in the news. So:

The U.S. economy added 157,000 jobs last month, after accounting for normal seasonal fluctuations. That’s not great, but it’s not bad.

Ok!

Of course, the U.S. didn’t probably didn’t add exactly 157,000 jobs (after accounting for seasonal factors). The truth is, we don’t know exactly how many jobs the U.S. added. The jobs number is based on a survey of businesses that employ over 40 million million workers, but that still leaves about 90 million workers who aren’t captured in the survey.

Where are you going with this?

There’s a fair bit of uncertainty about what the true jobs number is. In fact, the BLS quantifies the uncertainty. So we can make this bold statement about what the jobs report really says:

There is a 90 percent chance that the U.S. economy added somewhere between 65,000 and 249,000 jobs in January, after adjusting for seasonal fluctuations. There is a 10 percent chance that the U.S. actually added fewer than 65,000 jobs or more than 249,000 jobs during the month.

(It’s worth noting that, if the headline number in the report were 65,000, everybody would be saying it was disastrous; if it were 249,000 everybody would be saying it was fantastic.)

I’m afraid to even ask about the unemployment rate.

The unemployment rate is based on a separate survey — a survey of households, rather than businesses — that has its own measure of uncertainty. So:

There’s a 90 percent chance that the unemployment rate is between 7.7 percent and 8.1 percent. There’s a 10 percent chance that it’s either lower than 7.7 percent or higher than 8.1 percent.

Is this a very long way of telling me to ignore the jobs report?

No! The jobs report is one of the best ways to figure out what’s going on in the economy.

You’re killing me.

The trick is to focus on the long-term trends, and not pay too much attention to any one number.

For one thing, the random fluctuations tend to cancel out from one month to the next, so when you look at the pattern over a few months you start to see what’s really happening.

On top of that, the numbers get more reliable over time, as they are revised based on more complete data. Just today, the government released a big revision for last year. It turns out, the economy added about 300,000 more jobs last year than they initially reported.

So the jobs numbers I read in the news every month last year were basically wrong?

Exactly! The typical monthly number was off by about 25 percent!

Whatever. [Copyright 2013 NPR]

Leave a Reply

11PM to 5AM The Spy

The Spy

An eclectic mix of the Spy's library of more than 10,000 songs curated by Ferris O'Brien.

Listen Live Now!

5AM to 6AM The Splendid Table

The Splendid Table

Hosted by award-winning Lynne Rossetto Kasper, The Splendid Table is a culinary, culture and lifestyle program that celebrates food and its ability to touch the lives and feed the souls of everyone.

View the program guide!

6AM to 7AM Travel with Rick Steves

Travel with Rick Steves

"Travel with Rick Steves" is a fun, hour-long, and practical talk show with guest experts and calls and questions from travelers. This weekly program is a lively conversation between travelers and the experts as we learn to explore our world smartly, smoothly, and thoughtfully.

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center