Before the Bureau of Labor Statistics released the non-farm payroll report for November this morning, you didn't have to look hard to find headlines like "Jobs Report Has Market On Edge." In part this was due to a not very encouraging private sector labor report released on Wednesday, but the anxiety also had its roots in a mysterious comment made by White House Press Secretary Robert Gibbs on Thursday.
"One payroll estimate came out ... yesterday and it seemed to suggest that [the unemployment rate] might tick upward."
At Capital Gains and Games Pete Davis offered some context for this remark.
Every year or so, at the request of clients, I talk to Administration officials about when they receive advance economic data. The uniform answer is that the Fed Chair and the Chair of the Council of Economic Advisers receive the data at 5 p.m. the night before and that the CEA Chair writes a short memo to the President and a few senior officials, which is conveyed between 5:30 p.m. and 7 p.m. depending upon what else is going on. A few key congressional staff get briefed a few minutes ahead of the 8:30 a.m. release, but they are sequestered with no means of communication until then.
Gibbs is far too professional a communicator to make an off-hand comment like that without being prompted. My guess is that White House National Economic Council Director Larry Summers put him up to it with the President's assent and that this was done without knowing the unemployment number in advance. They suspect tomorrow morning's number will be higher, and they want to diminish the political impact. If they're wrong, it won't hurt them.
I'm not sure that I fully understand Davis' post. On the one hand he suggests the president had been given a heads up on the new numbers, but on the other he says that the directive to Gibbs was made "without knowing the unemployment number in advance." But whichever is true, the White House ended up seeming just as flat-footed as the consensus expectation of Wall Street analysts.
But back to the report. The top-line numbers, 10 percent unemployment, only 11,000 jobs lost, immediately goosed the stock market. But inside the numbers the news was also pretty good. The U-6 number, which measures workers who have stopped looking for work or are involuntarily part-time, dropped from 17.5 to 17.2 percent. Hours worked per week rose, suggesting that employers may soon feel pressure to hire new workers. Temp work took a big jump upward, another very positive sign suggesting economic recovery.
The main reason for caution? The monthly non-farm labor report is subject to extreme revisions in the months ahead. In this report, the BLS trimmed job losses for September and October by a significant margin: September's 263,000 number dropped to 139,000 and October's 190,000 fell to 111,000. So it is altogether possible that this month's 11,000 drop could turn out to be much worse later on.