I talked to an economist whose forecasts have tended to be quite solid over the years I have known him. Here’s what he had to say.
You can’t sugarcoat this report. This was not a good number. But it’s not quite as bad as it looks.
First, we think they’re a lag reflection of the [low] economic growth numbers for the first quarter.
Second, over the past twelve months for which we have two revisions, the average upward revision has been 35,000. So there’s a very good chance this is going to be revised upward. Last August was originally reported at plus 128,000. Two months later it had been revised upward to 230,000.
Or take the month of Katrina. The original number was a drop of 35,000 for September of ‘05. It ended up being a gain of 105,000. A large revision to this number would not be unusual.
Some underlying numbers in the report were not bad. Average hourly earnings were up over last year and the total number of hours worked were unchanged from last month.
Third, sometimes these things just happen. In May 1995, in the middle of one of our strongest expansions, non-farm payrolls went down 9,000. But then they quickly rebounded.
It was a mediocre report, not an awful report.