Oliner quick take on the September monthly jobs report

Nonfarm payrolls rose by 114,000 in September and the unemployment rate dropped to 7.8 percent, the Bureau of Labor Statistics reported Friday. The rate is now down at the level of January 2009, and below 8 percent for the first time in 44 months.

As voters head to the polls ahead of the Nov. 6 election, the BLS report provides a crucial indicator of the US economy even though the numbers are difficult for many to interpret.

AEI Resident Scholar Stephen Oliner, who spent 25 years as an economist with the Federal Reserve Board, most recently as senior adviser in the Division of Reseatch and Statistics, explained what the numbers mean.

"Overall, today's report was stronger than I had expected, but the message from the report is not nearly as bullish as would be suggested by focusing on the drop in the unemployment rate.  As you may know, the report combines the results from two separate surveys — a survey of employers and another of households.  

"The survey of employers showed only a modest increase in payrolls in September (114,000), which was close to consensus expectations.  There were upward revisions to the employment gains in July and August, but even so, the data indicate that employers remain very cautious about adding to their payrolls.  

The unexpected figures all came from the survey of households, which showed a massive gain in employment (873,000) and a drop in the unemployment rate from 8.1 percent to 7.8 percent.  The household survey is based on a relatively small sample and is much less reliable than the employer survey as a measure of monthly developments in the labor market.  Indeed, the sharp rise in household employment followed declines of about 100,000 in August and 200,000 in July.  This volatility counsels against putting a lot of weight on any single month of data from the household survey.   

"Given the cross-currents in today's report, we will have to wait for another month or two of data before we'll have a better handle on the trends in labor market conditions."

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About the Author

 

Stephen D.
Oliner
  • Stephen D. Oliner is a resident scholar at the American Enterprise Institute (AEI) and a senior fellow at the University of California, Los Angeles (UCLA) Ziman Center for Real Estate.

    Oliner joined AEI after spending more than 25 years at the Federal Reserve Board. An economist by training, Oliner held a number of high-level positions at the Fed and was closely involved in the Fed's analysis of the US economy and financial markets. Since leaving the Fed, Oliner has become well known for his analysis of US monetary policy and has maintained an active research agenda that focuses on real estate issues and the US economy’s growth potential.  He is coprincipal developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.

    Oliner has a Ph.D. and an M.S. in economics from the University of Wisconsin. He received a B.A. in economics from the University of Virginia.

  • Phone: 202.419.5205
    Email: stephen.oliner@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202.419.5212
    Email: emily.rapp@aei.org

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