How to Think About the Surprising US Jobs Data
September's labor market report shows economists are missing important drivers of US strength. Here's why they keep getting it wrong.
A September surprise.
Photographer: Yuki Iwamura/Bloomberg
Judging from the public commentary, last Friday’s US jobs report confused economists in terms of their understanding of economic developments in the world’s largest economy and the policy approach of the Federal Reserve. Virtually all the reactions have focused on “what” to think, but this episode also has important implications for “how” to think.
The surprise in Friday’s employment report is not to be underestimated. It extended well beyond a monthly job creation pace that, at 254,000 for September, was more than 100,000 above the consensus forecast and some 30,000 higher than the top estimate in Bloomberg’s survey of economist expectations. This unexpected turn of events came with upward revisions to the prior months’ numbers, sparking even more intrigue, as did other elements of the data release.