Shutdown's surprise effect on jobs numbers

Employers appeared to have ignored the shutdown and hired away
Associated Press
Nov 9, 2013

The government shutdown may have affected October's jobs numbers. But not how you think.

For weeks, the White House had braced for a dour report on hiring, with economists and aides lowering expectations and blaming last month's partial shutdown for the inevitable bad news to come.

Then Friday's numbers materialized: Employers appeared to have ignored the shutdown and hired away, to the tune of 204,000 jobs in October.

The shutdown, it seemed, had had no effect.

Not so fast.

In the height of irony, the 16 days of federal worker furloughs and government disruptions may have helped, not hurt, the improved jobs picture.

Typically, jobs numbers are announced on the first Friday of the month. Because of the shutdown, the Bureau of Labor Statistics delayed the release of the jobs numbers by one week to allow more time to collect payroll and household data. That extra time resulted in an above average response rate for payroll data.

So, not to get hung up on numbers, but the average participation rate by employers in payroll surveys for the nine months before October was 76.4 percent. That meant that in subsequent months, as more data was collected, the hiring numbers were adjusted, often upward.

In October, with an extra week to collect data, the participation rate was 83.5 percent, the highest ever.

A robust hiring number, to some economists, now felt slightly inflated.

"It seems that when the initial response rate is high, the initial payroll number is often, though certainly not always, stronger than the prior trend," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note.

In other words, if the jobs numbers in prior months were based on a lower participation rate, a stronger participation rate would skew the number up.

"Tentatively, we think the effect of this could explain all the overshoot in payrolls," Shepherdson wrote.

As a result, some economists are predicting that when the October numbers are updated, they might be in for a downward revision and that November could yield a lower number as well.

"Businesses may have inadvertently counted employment for an extra week," said Mark Zandi, chief economist at Moody's Analytics. "That could juice up the number. That may mean that we actually get surprised next month with a much weaker number."

The shutdown had another effect on the employment data.

Besides conducting a survey of employers, which gives data on actual hiring, the government also surveys households to determine the unemployment rate.

Furloughed federal employees were considered unemployed during the shutdown and thus contributed to the increase in the unemployment rate in October from 7.2 percent to 7.3 percent. Without the furloughs, the unemployment rate would have dropped.

Complicating things, some furloughed employees were counted as still employed. As a result, if they had been properly listed as unemployed, the jobless rate for October could have been higher than 7.3 percent.

But those are temporary anomalies and they won't affect the November unemployment rate.

Even with data showing more hiring in the month, President Barack Obama on Friday stuck with the White House theme that the shutdown "harmed our jobs market."

"The unemployment rate still ticked up and we don't yet know all the data for this final quarter of the year, but it could be down because off what happened in Washington," he said.

The data did have some warnings. Americans' participation in the labor force went down.

"Even factoring out the impact of the shutdown, we have a lot fewer people in the labor force than you'd expect," said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and former economic adviser to Vice President Joe Biden. "That pushed the unemployment rate down because they are not looking and it takes away from growth."

Then he apologized for being a two-handed economist:

"I consider the (jobs) report evidence of a resilient American economy on the one hand, but some pronounced remaining weaknesses on the other."

 

Comments

The Big Dog's back

March 11, 2009 was bush's budget you moroon.

grumpy

"March 11, 2009 was bush's budget"

Obama signed it, It was his budget, if he didn't want it, he didn't have to sign it. No one held a gun to his head. He owned it when he signed his name to it. If he didn't want it, the supermajority of dimrats in the Senate, with the majority of dimrats in the house, could have made whatever budget they wanted to. Obama signed it, he owns it, moron.

Darwin's choice

Don't confuse big dog with actual facts, he'd much rather mirror Obama, and believe what he say's is the truth......

4shizzle

You don't know what's going on , you just jumped in.

Contango

"One of the reasons it (fed deficit) is falling is because it shot up so high in the first place.

As the financial crisis devastated the economy, tax revenues fell.

Spending on unemployment insurance and other government recovery programs rose.

In 2008, the deficit was about $458 billion. In 2009, it rocketed up to $1.4 trillion. It stayed above the trillion-dollar mark for 2010 through 2012.

As the economy has gradually recovered, those cyclical expenses have receded.

Tax revenues have risen modestly along with the slowly rising gross domestic product.

The FY 2013 shortfall should end up at around $642 billion, according to the CBO.

The sequestration automatic budget cuts have also cut spending."

http://www.csmonitor.com/USA/DC-...

This is kinda like Pres. Obama crowing about gas and oil production being at record levels during his Admin.

He has little of anything to do about it.

Read: Business cycle.

Darwin's choice

"despite all evidence to the contrary" you continue to deny that your idol is a failure. You're continued cheerleading here is "breathtaking" in itself, but facts are facts.....care to deny these???

http://www.thenewamerican.com/re...

mikesee

Just for you coasterbluff:

"On George W. Bush’s last day in office the US public debt was $10.626 trillion. On Oct. 5, 2012 (you can see the debt to the penny at the Treasury’s Bureau of Public Debt website) the total debt outstanding was about $16.161 trillion."

And this doesn't even take into account the out of control spending the Obama has done in 2013. Where is the evidence to the contrary?

Keep drinking the kool aid coasterman.

mikesee

One more for you coasterbluff:

"Part of the problem is that the food-stamp program has grown like wildfire under Obama — to $80 billion last year, with a more than 70 percent increase in recipients just since 2008."

Your boy just likes to spend, spend & spend.

kURTje

Prior discourse here validates much of what I stated before. Most older people knew a better economy (those over 50) . They are they "entitled generation." Thanks to a local group I'll celebrate my free dinner tomorrow. Proud to serve.

Darwin's choice

Semper Fi

grumpy

"Most older people knew a better economy (those over 50)"

What it has actually shown is that Reagan solved the economic problems much faster and better than what Obama has done. The problems each faced were very different. Obama inherited unemployment going up, that is still being worked on, but he had low to no inflation, and historically low interest rates. Reagan inherited double digit unemployment, double digit inflation, and double digit interest rates. Which was worse, having to fix one thing, or three things? Reagan fixed his in a little over a year after Carter stumbled along with it for over three years. Bush stumbled along with it for less than a year while Obama stumbled for an additional 3 years or so. Which was worse? I have seen no proof of which was better or worse. If you have any please produce it for all to read and compare. Show us which was worse and why. Saying one is worse with nothing but your opinion backing your statement is meaningless.

kURTje

Raygun taxed working people's vacation as a luxury (48%). He also raised the age of getting SSI. Along with other stuff. Who knew?? He also ruled like Hitler - by the zodiac.

grumpy

Thank you for providing proof of your statements about this being a worse economy that what was in the late 70's. Oh wait.... You deflected... again.

Contango

The world's central planners believe that the "cure" for the disease of economic slow growth and financial crisis is more of the disease.

"Race to Bottom Resumes as Central Bankers Ease Anew: Currencies"

http://www.bloomberg.com/news/20...

Also, China is looking to replace the USD as the world's reserve currency. This will work to curtail the U.S.' massive debt expansion.

For one, they just recently signed a currency swap deal with the UK.

http://www.bbc.co.uk/news/busine...

For another, the Chinese have been buying massive amounts of gold.

It won't matter who the POTUS is or was when the SHTF.

Dr. Information

Contango, these liberals just do not see it nor care to even research. They just spout off the same old rhetoric like typical Obamabots.

kURTje

Geez grump not again. You lived it so did my relatives. Always need a link? Every thing needs qualified for you? Embrace facts. btw most know when the father worked & the mother stayed home with the kids? That's the stuff we know is true. That example alone validates what was spoken.

grumpy

As I stated you have nothing to back your claim. Your "facts" are your Interpretations of what some people, in one area of the country, have said. It is called opinions. If you can't back up your statements, they are called opinions and are not considered proof or facts. If you can back them with something other than some other peoples opinions then you get into the realm of facts. Sorry your claim that in the late 70's that mothers stayed home is not correct. If you wish to raise your claim to those over 65 having better economic times your claim that in the 60's mothers stayed home, you might be able to have folks agree, but I doubt it. You need something more than a couple of your family agreeing with each other and you. Look up some gov't stats on inflation interest rates, and unemployment and compare them with bot time frames you wish to make claims about, for starters. Otherwise it is just opinion.

Back then they also had one tv at most, one car, no video games, no computer, few vacations, very few had boats, wave runners, air conditioners, dish washers, play stations, gameboys, ATV's, 4x4's, little travel, rare nights out for entertainment. I could go on but then EVERYBODY knows that there was much less consumerism back then, compared to the last 20 -30 years. See how opinions don't always hold true.

kURTje

My father worked very hard. My mother stayed at home as a housewife. Dad drove an old rugged Ford pick-up while mom had the late model LTD. Our neighbors were similar other than their vehicle brands. I lived it & heard my relatives speak of their times. Sorry that your folks weren't as successful.

grumpy

And from your family and your neighbors you extrapolate how the rest of the country (hundreds of millions of people covering this whole country) handled the Carter recession? What a wonderful scientific method of comparison you make. I wonder how or why anyone could possibly question your opinion using such methods of how things were back then. Thank you for being an example.

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