When Kash delivered the disappointing news about how little employment growth we saw last month – not to mention the weak increase in nominal hourly wages and the fall in the average workweek – I jokingly commented that the White House talking points would be about the 4.6% unemployment rate and the increase in the household survey figure. And sure enough – Lawrence Kudlow comes through:
You can’t win with the economic pessimists. The cult of the bear still reigns supreme in most corners of Wall Street and the mainstream media, as those who want to tear down the economy continue to manufacture justifications for their declinist American views. If jobs reports come in above expectations, the naysayers predict inflation. When they come in below, the pessimists predict recession. So it was with Friday’s 75,000 increase in non-farm payrolls for May. That number was greeted derisively, despite the fact that over the past 33 consecutive months, 5.3 million new jobs have been created. Through the year ending in May, 1.9 million new jobs have been created with the unemployment rate moving down to 4.6 percent – the lowest rate in nearly five years and below the average of the last forty-five years. But wait – there’s even more good news being clouded out by the pessimist frowns: The Labor Department’s household survey, which focuses on self-employed owner-operators of new entrepreneurial businesses, showed a booming May jobs increase of 288,000.
Kudlow is still trying to tell us that this household survey figure is a more reliable indicator of the labor market than the payroll survey figure. I’ll leave to others to remind Kudlow of all the problems with his spin on this one and simply remind everyone as to the time path of the employment to population ratio from 1998 to today – given the fact he remains unaware that part of the reason why the unemployment ratio is back down to 4.6% has to do with a decline the labor force participation rate.
The official version of the White House talking points can be found here:
Today, The Government Released New Jobs Figures – 75,000 Jobs Created In May. The economy has created about 1.9 million jobs over the past 12 months – and more than 5.3 million since August 2003. The unemployment rate fell to 4.6 percent – lower than the average of the 1960s, 1970s, 1980s, and 1990s.
Yep – you don’t need good news when you have the ability to simply spin anything.
Update: I’m trying to figure out what Kudlow means by “The Labor Department’s household survey, which focuses on self-employed owner-operators of new entrepreneurial businesses”, which he seems to be saying represents the difference between the 288,000 increase in the household survey versus the 75,000 increase in the payroll survey – as if self employment rose by 213,000. Table A-5 indicates an increase of only 40,000 as far as self-employed workers in the non-agricultural sector and a 47,000 decrease as far as self-employed workers in the agricultural sector. It would seem to me that the BLS measure of self-employed workers fell by 7000 last month. What am I missing here? Is there some other category or has Kudlow just made another bogus claim? After all, there can be other reasons why these two surveys show differences in the reported increase in employment beyond the change in self-employed workers. I would hope Kudlow would have figured that out by now.
Update II: AB reader Invictus provides this from David Rosenberg:
To be sure, the Pollyannas will point to the fact that the Household Survey showed a far different headline than the nonfarm report did – +288k for the former as opposed to +75k for the latter. But don’t be fooled – that Household Survey also flagged softness beneath the veneer because all the gains were in part-time; full-time jobs actually plunged by 292k in May, which was the steepest decline since Feb/05.
Full-time jobs did fall by 292,000 according to the seasonally adjusted figures while part-time jobs rose by 486,000 so that the latter rose from 17% to 17.3% of total reported employment per the household survey. To be fair – the percent of employment from part-time jobs was 17.2% as of December 2000. To add to the confusion that the Pollyannas spinmeisters might used – Kudlow might consider reporting the unadjusted figures where reported employment rose by 636,000 including a 334,000 increase in full-time jobs.