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

Dr. Information

The payroll/unemployment surveys are a complete waste of time. Why? Because the same person who just checked the box saying "Not working full time" on their at home survey will be considered "working" by their employer if they are ONLY working part time.

The survey is completely put together wrong with not enough options. Facts are, the government really doesn't want you to know the actual numbers of unemployed people, aka U6. In June it was 14.3, July 14.0, August 13.7, September 13.6 (bottomed out), October 13.8.

With the struggling economy and poor retail Q3 reports, the end of the year sales are trending to be a pretty bad as we head into the largest spending part of the year and retailers are worried.

Of course the government says "Hey, the GDP rose 2.5% points to 2.8% July-September. What they don't mention in the next line is the truth behind the numbers within the GDP numbers. Consumers and business's cut back on spending in the summer months and just recently RESTOCKED and restocked big time, preparing for the end of the year HOPEFUL splurge by Americans. That single handily caused the GDP to look more bloated than it truly is. Retailers across the nation are hoping their warehouses are empty come December 25th.

deertracker

If you have even a part-time job you are employed!

Contango

Re: "If you have even a part-time job you are employed!"

And two PT jobs DO NOT EQUAL one FT job.

The "underutilization" number (U-6) increased to 13.8%

http://www.bls.gov/news.release/...

Welcome to the Obama "McJobs" recovery!

The Big Dog's back

"And two PT jobs DO NOT EQUAL one FT job." It did during any Repub administration. What's change? Oh, wait a minute, the guy in the White house.

muec95

---= Google is paying 80$ per hour! Just work for few hours & spend more time with friends and family. on sunday I bought themselves a Alfa Romeo from having made $5637 this month. its the best-job Ive ever had.It sounds unbelievable but you wont forgive yourself if you don’t check it out http://goo.gl/f6e95V

mikesee

The is very misleading. The majority of people being hired were for hospitality jobs and servers. The second batch was hired as seasonal. The least amount to be hired were for manufacturing positions.

deertracker

Your point? A job is a job, remember?

mikesee

$10 to $15 per hour.

Contango

Meanwhile, look at the U.S. Labor Force Participation rate.

It's WORSE than 35 yrs. ago.

Oct. 1978: 63.3

Oct. 2013: 62.8

http://data.bls.gov/timeseries/L...

ABSOLUTELY NOTHING for the Obama Admin. to brag about.

Without the Fed Resv.'s QE & ZERP, this economy would be flat on it's back.

Also, just wait until the ACA employer mandate rules kick in next yr.

The bureaucratic mess that we've been witness to recently will be magnified astronomically and will affect employment numbers.

coasterfan

Still beats the heck out of the 800,000 jobs we were losing under Bush each month towards the end of the most disastrous presidency of at least the last 100 years. It takes some mental gymnastics to somehow believe that that things aren't better now than they were in 2008.

It's common knowledge that conservatives' focus on the deficit - and nothing but the deficit - has slowed job growth, as has their fight against all of Obama's jobs programs. Since they are part of the problem, rather than the solution, it's disingenuous, at best, for them to complain about unemployment.

Contango

Re: "Obama's jobs programs"

And the funding for more profligate spending comes from where?

More like job growth, capital expenditures and business expansion has been slow due to the tax and regulatory policy uncertainties propagated by the Obama Admin.

grumpy

"he most disastrous presidency of at least the last 100 years."

I think Johnson for Vietnam and the "Great Society" and Carter for the economy and Middle East peace policies and how those actually turned out compared to what he claimed they would do, make that assurtion rather far fetched. Wait a few decades and see what history says when party bias hatred means less than today. Much like FDR and Kennedy are lossing their "halo's and what they actually accomplished and did, rather than what and how they said they would do can be seen. Reagan and Obama will be put through that same scope. Then what they actually did will be looked at, not what they said... what actually happened. It takes a few generations to come about.
.
.
.
.
.
"It's common knowledge that conservatives' focus on the deficit - and nothing but the deficit - has slowed job growth, as has their fight against all of Obama's jobs programs. Since they are part of the problem, rather than the solution, it's disingenuous, at best, for them to complain about unemployment."

It is common knowledge that EVERYONE has been focused on jobs from the end of Bush's term to today. Trying to change the debate is what many call losing the debate. I have not seen where or when unemployment was not in the spotlight along with the deficit Obamacare, Iraq, Afganastan, TSA, Patriot Act, and more, for nearly 6 years. Are you not able to walk and chew gum? It is called real life, it is never just one thing at a time. That is the difference between academia and the real world.

Contango

Re: "The most disastrous presidency of at least the last 100 years."

Maybe not. There's still three yrs. left to go with the current WH occupant. :)

And meanwhile, Mr. "I've been burned already with a website" popularity numbers continue to plummet.

"Bush's fault"?

"For every complex problem there is an answer that is clear, simple, and wrong."

- H. L. Mencken

Typical of the politically and fiscally simple minded, who tend to gravitate toward and embrace sound bite rhetoric.

Darwin's choice

With Veteran's Day tomorrow...

For coasterfan and deertracker..

showing the incredible incompetence of the Obama Administration...

consider these facts......

March 21, 2010 to October 1, 2013 is

3 years, 6 months, 10 days.

December 7, 1941 to May 8, 1945 is

3 years, 5 months, 1 day.

What this means is that in the time we were attacked at Pearl Harbor to the day Germany surrendered is not enough time for this federal government to build a working website.

Mobilization of millions, building tens of thousands of tanks, planes, jeeps, subs, cruisers, destroyers, torpedoes, millions upon millions of guns, bombs, ammo, etc. Turning the tide in North Africa, Invading Italy, D-Day, Battle of the Bulge, Race to Berlin - all while we were also fighting the Japanese in the Pacific!

….and they can't build a health care website.

Obama/Fail

deertracker

Go lay down!

Darwin's choice

Yep, you've got nothing......good reply from you though.

Typical from an Obama clingon.

The Big Dog's back

durwood, you can call the Healthcare hotline anytime you want. Do you remember how to use a phone?

Darwin's choice

Reality kinda slaps you in the Obamalicker, eh?

thinkagain

Great analogy!

mikesee

The one thing Obama does better than Bush is spending. Higher deficits coupled with out of control spending negates any increased tax revenues. Hard to understand isn't it coaster?

Contango

Re: "Higher deficits coupled with out of control spending,"

And just wait until the EVENTUALITY of when the almost $4 trillion of Treasuries on the Fed. Resv.'s balance sheet begins to lose value and interest rates spike higher.

Essentially all the Fed. Resv. did was help “paper over” the last financial crisis and made financial institutions that were “too big to fail” into “too BIGGER to fail.”

Remember Warren Buffett:

"Buffett Calls Fed History’s Greatest Hedge Fund"

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

Hedge funds never go bust do they?

Know this: Over the past several decades, under the direction of the FDIC, Bank of America has merged with 30 of the 50 largest failed banks.

Also, foreigners have been curtailing their purchase of U.S. govt. debt.

In the end, it won’t matter who’s POTUS or some f 'n "jobs program" when the SHTF.

deertracker

They just don't get it coaster. Who was it that said "lead, follow or get out of the way"?

Contango

Re: "They just don't get it coaster."

"Get" what; your "true believer" level of faith and slavish devotion to Pres. Obama?

What happened to the original $1T "stimulus" money?

"Sh..shovel ready was not as eh shovel ready as we expected."

- Pres. Obama (smiling and smirking).

http://www.youtube.com/watch?v=O...

A more appropriate saying: Fool me once, shame on you. Fool me twice, shame on me.

deertracker

Bottoms up pooh!

Contango

Re: "Bottoms up"

Meanwhile, your head is FAR "up" Pres. Obama's. :)

How much he REALLY cares about jobs:

"Obama's Jobs Council disbanded as its charter expires"

http://www.usatoday.com/story/th...

4shizzle

You are already a fool - now what?

coasterfan

Where to begin, where to begin? The last several conservative posts contain so much misinformation, it's absolutely breathtaking. My favorite comment was Mikesee's, about Obama's supposed spendthrift ways. Those of us who are actually paying attention know that both the deficit and spending grew under every Republican president since the 1970's. We are also aware that spending rose an average of 8% per year under Bush, and less than 2% under Obama. We are also aware that the deficit continues to shrink under Obama.

The fact that Fox and conservative talk radio continue to report that the exact opposite is happening, despite all evidence to the contrary, tells us all we need to know about their veracity as a "news source".

Contango

Re: "We are also aware that the deficit continues to shrink under Obama."

Due primarily to sequestration "cuts," which Pres. Obama and the Dems want reinstated.

If deficits are declining, why then did the Fed. debt ceiling need to be increased?

Meanwhile, Fed. Resv. off-balance sheet govt. financing of about $4T helps keep this economy afloat.

"Fox"? Keep watching Bill Maher as your "news" source. :)

The Big Dog's back

rupert murdock is your news source pooh.

grumpy

"We are also aware that the deficit continues to shrink under Obama."

5 of the 6 largest deficits in the USA have been the 5 deficits seen under Obama.Also next years deficit is projected to go up yet again.

http://www.usgovernmentspending....

The reason that the deficits have gone down under Obama is that the 2009 budget, the only one that has been passed since Obama was elected was signed into law by Obama on March 11, 2009.

http://en.wikipedia.org/wiki/200...

Obama's first budget TRIPLED the deficit from Bush's last year in office (which was his highest deficit) , and now that he cut it in half from Obama's own highest deficit, wants to claim accomplishing something by cutting his deficit in half, all the while making his smallest deficit almost double of Bush's highest deficit. That sure is something to be bragging on. His deficits have been 5 of the 6 highest deficits ever. He has 3 more years to get 7 of the highest 8, look at the projected deficits in the link above. Aren't you proud of his policies? Ain't math great?

Pages