By Paul Krugman / The New York Times
The great Biden employment boom (16 million jobs added since he took office) took a breather last month, according to Friday morning’s report, with a gain of only 12,000 jobs and downward revisions to some earlier numbers. Much of the slowdown reflected special factors; Hurricane Helene and the Boeing strike. But job gains still fell short of most forecasts, even though the forecasters knew about these factors.
So what did we learn? Mostly that you shouldn’t pay much attention to monthly job numbers.
I’m not sure how many people are aware that the monthly numbers released by the Bureau of Labor Statistics are based on surveys, not a comprehensive count; in that sense, they’re like opinion polls. (The numbers are revised once a year when the BLS does a comprehensive count associated with the unemployment insurance program.) There’s also an element of modeling involved, as the bureau tries to estimate the effects of entries of new employers and exits of existing employers.
All of this is done both competently and scrupulously, at least for now. One concern I have if Donald Trump wins is that his administration may well do what Republicans constantly accuse Democrats of doing and begin rigging the economic data. (If you think these accusations will stop because the BLS announced weak job numbers just before the election, you’re being naive.)
But there is, inevitably, a lot of noise in monthly data, and it’s foolish to draw big conclusions from one month’s numbers. No, the big number last month didn’t mean that the Fed was wrong to go for a big rate cut. No, this weak report doesn’t mean that we’re on the edge of recession.
The broader picture is that America is still adding jobs at a solid pace but that job growth is probably slowing. And that’s OK. Although immigration has expanded the workforce, employment probably couldn’t keep growing as fast as it has over the past year without eventually producing an overheated, inflationary economy.
What we seem to be getting instead is employment growth decelerating to a sustainable pace while inflation has already fallen close to the Fed’s target. That’s exactly what we mean by a soft landing. And we seem to have pulled it off.
This article originally appeared in The New York Times, c.2024.
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