And that’s all the time we should spend forecasting these volatile monthly numbers.  More interesting, I think, is the question of why everyone gets so wrapped up in the monthly numbers when the actual signal-to-noise ratio they yield is not that high.  The 90% confidence interval around the payroll number, for example, is about 100,000, meaning there’s a 90% chance that the actual change in payrolls in a given month is that much higher or lower than the reported change.  So, given last month’s initial print of 88,000, we can’t rule out the possibility we actually lost jobs.

Well, one reason for all the attention, courtesy of GS analysts, is that the jobs report doesn’t just move markets.  It moves markets far more than any other economic indicator.  The figure below plots how equity futures and the yield on the 10-year T-bill respond to upside surprises in the various indicators we all pour over.

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But only slightly beneath the surface, the report showed continuing weaknesses in the US economy and, consistent with the unexpectedly weak March jobs report, hints at another softening of demand in recent months.  Expectations were for growth above 3% but disposable income, a critical driver of growth in our 70% consumption economy, fell sharply, down 5% in real terms, partly due the loss of the payroll tax break.

The two main factors propelling the economy forward last quarter were firms restocking their shelves (inventory build-up adds to GDP growth) and strong spending by the stalwart American consumer, drawing not on their income but on their savings.  Since the inventory component is both highly volatile and less indicative of current demand, it’s useful to look at final demand, essentially GDP without the inventory build-up.  This measure grew 1.5% in real terms in the first quarter, down from 1.9% in the last quarter.  Again, this less volatile measure tracks demand more closely than the headline number.

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While the jobless rate fell to 7.6 percent, much of the drop was due to the labor force shrinking by almost a half million people. If you’re not looking for work, you’re not counted as unemployed.

That means the percentage of working-age Americans either with a job or looking for one dropped to 63.3 percent — its lowest level since 1979.

The direction isn’t encouraging. The pace of job growth this year is slower than its pace last year.

What’s going on? The simple fact is companies won’t hire if consumers aren’t buying enough to justify the new hires. And consumers don’t have enough money, or credit, or confidence to buy enough.

It’s likely Americans are beginning to feel the pinches of January’s hike in the payroll tax combined with the government budget cuts known as the sequester. Increases in gas prices haven’t helped. All are taking money out of the pockets of most people – whose job situation remains precarious. So they can’t and won’t buy much.

One indicator: Retailers cut their staffs in March — by 24,100.

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The Labor Department says the unemployment rate dipped to 7.6 percent from 7.7 percent. While that is the lowest in four years, the rate fell only because more people stopped looking for work.

The weakness may signal that companies were worried last month about steep government spending cuts that began on March 1.

March's job gains were half the pace of the previous six months, when the economy added an average of 196,000 jobs a month. The drop raises fears that the economy could slow after a stronger winter.

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Whether the better-than-expected results signal a faster underlying trend in job growth, and whether it can withstand the fiscal drag from the sequester, is yet to be seen, a point I return to below.

Since we want to avoid reading too much into any one month in these volatile data, the smart move is to average the last few months of payroll gains to smooth out the noise.  Doing so reveals some acceleration in hiring: over the past three months, average monthly gains were 191K; over the prior three months, 182K; and over the three months before that, 135K.

Unemployment is also down from 8.3% a year ago to 7.7% last month, as noted.

I’ll work up the details throughout the day* but for now, let’s think a bit about what this report may be telling us:

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In fact, apart from the Fed – which continues to hold interest rates down in the quixotic hope that banks will begin lending again to average people – the government is heading in exactly the wrong direction: raising taxes on the middle class, and cutting spending.

The Bureau of Labor Statistics reported Friday that American employers added only 157,000 jobs in January. That’s fewer than they added in December (196,000 jobs, as revised by the Bureau of Labor Statistics). The overall unemployment rate remains stuck at 7.9 percent, just about where it’s been since September.

The share of people of working age either who are working or looking for jobs also remains dismal – close to a 30-year low. (Yes, older boomers are retiring, but the major cause for this near-record low is simply the lack of jobs.)

And the long-term unemployed, about 40 percent of all jobless workers, remain trapped. Most have few if any job prospects, and their unemployment benefits have run out, or will run out shortly.

Close to 20 million Americans remain unemployed or underemployed.

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The mostly upbeat Labor Department report included one discouraging sign: the unemployment rate rose to 7.9 percent from 7.8 percent in December. The unemployment rate is calculated from a survey of households, while job gains come from a survey of employers.

The hiring picture over the past two years looked better after the department's annual revisions. Those showed employers added an average of roughly 180,000 jobs per month in 2012 and 2011, up from previous estimates of about 150,000. And hiring was stronger at the end of last year, averaging 200,000 new jobs in the final three months.

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The last time consumers were this bummed out was October 2011, when there was widespread talk of a double-dip recession.

But this time business news is buoyant. The stock market is bullish. The housing market seems to have rebounded a bit.

So why are consumers so glum?

Because they’re deeply worried about their jobs and their incomes – as they have every right to be.

The job situation is still lousy. We’ll know more this coming Friday about what happened to jobs in January. But we know over 20 million people are still unemployed or underemployed.

Personal income is in terrible shape. The median wage continues to drop, adjusted for inflation.

Most people can’t get readily-available loans because banks are still cautious about lending to anyone without a sterling credit history. (Eliminate student loans and you find Americans aren’t borrowing any more than they were a year ago.)

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December’s payrolls were up 155,000 and the unemployment rate held steady at 7.8 percent.  Factories and construction sites added jobs — 25,000 and 30,000, respectively — an improvement over recent months.  On the other hand, the public sector shed another 13,000 jobs, driven exclusively by local governments, the continuation of a longer-term negative trend as localities struggle with budget constraints.

Hourly wages and average weekly hours got a bit of a bump up as well, so weekly earnings are up 2.4 percent over the past year.  Since inflation recently has been tracking at around 2 percent, that’s a slight gain in real pay (important, because starting this month, most workers will take a 2 percent hit to their paychecks due to the expiration of the payroll tax break, a casualty of the fiscal cliff deal).  There was also some evidence of more folks moving from part-time into full-time jobs.

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The number of new jobs created in December (155,000), and percent unemployment (7.8), were the same as the revised numbers for November.

Also, about the same number of people are looking for work (12.2 million), with additional millions too discouraged even to look.

Put simply, we’re a very long way from the job growth we need to get out of the gravitational pull of the Great Recession. That would be at least 300,000 new jobs per month.

All of which means job growth and wage growth should be the central focus of economic policy, not deficit reduction.

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The cost of borrowing is so low — the yield on the ten-year Treasury is near historic lows — and the need for more jobs and better wages so high, and our infrastructure so neglected, that it’s insanity not to borrow more to put more Americans to work rebuilding the nation.

Yes, unemployment is down slightly and 146,000 new jobs were created in November. That’s some progress. But don’t be blinded by the hype coming out of Wall Street and the White House, both of which want the public to believe everything is going wonderfully well.

The fact is some 350,000 more people stopped looking for jobs in November, and the percent of the working-age population in jobs continues to drop — now at 63.6%, almost the lowest in 30 years. Meanwhile, the average workweek is stuck at 34.4 hours.

The slowness of this recovery isn’t because of Hurricane Sandy, which it turns out had very little impact on these job numbers. And it’s not because of any uncertainty over the looming “fiscal cliff.” Most consumers in November were oblivious about any pending cliff.

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The Bureau of Labor Statistics reported that payrolls grew by 146,000 last month and unemployment ticked down to 7.7%, the lowest rate since late 2008.  That decline, however, was once again driven by labor force withdrawal, so it should not be taken as a sign of a tighter job market.

Analysts were expecting the impact of the storm on the most densely-packed labor markets in the country to significantly lower the job count.  But the Bureau reported that their survey response rates in the affected states were in the normal range, so they don’t believe Sandy is “substantively” distorting these numbers.

Construction data may, however, reveal some storm-related effects, with jobs off 20,000 in November after growing slightly in prior months as the housing market has begun to show signs of life (we’ll have to wait for the state data release later in the month to see if the losses were in affected states).

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The uptick in unemployment was expected after September’s 0.3 percentage point drop, but a few things are worth noting. First, the 0.1 point increase is statistically indistinguishable from no change at all -- the unemployment rate has to rise or fall about 0.2 points to be significant. At 7.9%, the jobless rate is down significantly -- by one full point -- from its rate one year ago. Second, one reason for the slight uptick was that more people came into the labor market seeking work. We’ll need to see how this development evolves in coming months, but we may be seeing early signs of an improving job market pulling more job seekers in from the sidelines.

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Today’s report showed 171,000 workers were added to payrolls in October, up from 148,000 in September. At the same time, unemployment rose to 7.9 percent from 7.8 percent last month. The reason for the seeming disparity: As jobs have begun to return, more people have been entering the labor force seeking employment. The household survey, on which the unemployment percentage is based, counts as “unemployed” only people who are looking for work.

As I’ve said, you have to take a single month’s report with a grain of salt because the job reports bounce around a great deal and are often revised. Last month the BLS announced that 114,000 new jobs were created in September. Today the BLS revised that September figure upward to 148,000.

Overall, the jobs trend is in the right direction. The president and Democrats can take some comfort.

The most disturbing aspect of today’s report is the continuing decline of wages. Average hourly earnings climbed 1.6 percent in October from the same time last year. That’s not enough to match the rate of inflation – meaning that hourly earnings continue to drop in real terms.

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Last month, after a strong jobs report showed the unemployment rate dropping below 8 percent, conservatives at Fox and beyond convinced themselves that the Bureau of Labor Statistics was pulling some funny business to boost the president a month before the election. This morning, BLS released its new monthly report, and it’s more good news: The economy added 171,000 jobs in October, almost 50,000 more than economists expected, and the previous two months’ reports were revised upward to the tune of 84,000 additional jobs.

So did the patriots at Fox News let out a whoop that more Americans had found jobs last month? Nope. In the first hour after the report came out, they found every possible way to spin the news as bad for Obama and good for Mitt Romney. When announcing the numbers, the Fox personalities always focused not on the number of new jobs added, but the fact that the unemployment rate ticked up from 7.8 to 7.9 percent, mentioning the 171,000 new jobs almost as an afterthought.

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If Mitt Romney was holding out hope that one last downbeat unemployment report would give his campaign some juice heading into the final weekend of the 2012 campaign, he is sure to be disappointed. The Bureau of Labor Statistics reported on Friday morning that the economy added 171,000 jobs in October, almost 50,000 more than had been expected by economists. The unemployment ticked up one meaningless notch, from 7.8 to 7.9 percent.

Indeed, this is a case where the rise in the unemployment rate is actually an encouraging sign. Total employment in the U.S., according to the BLS's household survey, rose by a very healthy 410,000, but the overall civilian labor force -- defined as the set of all Americans who have jobs or are looking for jobs -- surged by 578,000. The labor force participation rate, accordingly, rose to 63.8 percent. What that means is that Americans who had previously given up on the labor market are now actively looking for jobs again. The unemployment rate rose, paradoxically, because the job market is more encouraging.

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Unfortunately, the BLS report is likely to sway some voters — and therefore have an impact on this tight race. But it shouldn’t.

The report surely will be used by one of the candidates to make a sweeping case for himself and against his opponent. An unemployment rate above last month’s 7.8 percent, or a number of new jobs below September’s 114,000, will be wielded by Mitt Romney as evidence the economy is slowing – while a rate below last month’s, and a number above it, will be used by Team Obama as evidence the economy is moving in the right direction.

In truth, no one should base their vote on tomorrow’s labor report because a single month’s report isn’t a reliable gauge of which way the economy is heading. A report that the unemployment rate is 7.8 percent, for example, means only that the Bureau of Labor Statistics is 90 percent sure the real rate lies between 7.6 percent and 8.0 percent. By the same token, an announcement that the economy created 100,000 jobs in October means the BLS is 90 percent sure the number of new jobs is between 90,000 and 110,000.

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In political terms, headlines are everything – and most major media are leading with the drop in the unemployment rate.

Look more closely, though, and the picture is murkier. According to the separate payroll survey undertaken by the BLS, just 114,000 new jobs were added in September. At least 125,000 are needed per month just to keep up with population growth. Yet August’s job number was revised upward to 142,000, and July’s to 181,000.

In other words, we’re still crawling out of the deep crater we fell into in 2008 and 2009. The percent of the working-age population now working or actively looking for work is higher than it was, but it's still near a 30-year low.

But at least we’re crawling out.

Romney says we’re not doing well enough, and he’s right. But the prescriptions he’s offering – more tax cuts for the rich and for big companies – won’t do anything except enlarge the budget deficit. And the cuts he proposes in public investments like education and infrastructure as well as safety nets like Medicare and Medicaid, will take money out of the pockets of people who not only desperately need it but whose spending is necessary to keep the tepid recovery going.

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Do they have a case? Justin Wolfers, an up-and-coming economist about to begin a prestigious stint at the University of Michigan, emphatically says no. He explained why to Salon.

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