Friday, October 6, 2017

"Economists React to the September Jobs Report: ‘Doesn’t Carry Weight This Time’"

From the WSJ's Real Time Economics:
U.S. employers shed a seasonally adjusted 33,000 nonfarm jobs in September, the first negative reading on payrolls in seven years, and the unemployment rate dropped to a new business-cycle low of 4.2%. Forecasters had predicted hurricanes Harvey and Irma, which hit the U.S. in late August and September, would weigh on hiring during the month. Here are early reactions from economists and analysts to Friday’s report:

“The first thing that comes to mind here is the scene in ‘The Wizard of Oz,’ where we hear the line ‘pay no attention to the man behind the curtain.’ Because of the impacts from hurricanes and flooding, the decline reported in September payrolls doesn’t carry weight this time around. Case in point, the loss of more than 100,000 jobs in food and drinking establishments is surely only temporary.” —Mark Hamrick,

“Nominal wages…showed a nice boost. The BLS commissioner notes that this may be due in part to the hurricanes and their aftermath, as well. The food services sector was particularly hard hit in September—losses in this lower-wage sector likely pulled up the overall average wage.” —Elise Gould, Economic Policy Institute

“On a three month average annualized basis average hourly earnings are up 3.6%. This is a far better reflection of the wage environment in the real economy where there are simply not enough workers to meet current demand for labor. From our perspective, there is roughly only 1.3 individuals for every job opening and wage gains are in the pipeline with some inflation trailing behind.” —Joseph Brusuelas, RSM

The highlighted bit is reminiscent of the Will Rogers  phenomenon -via Wikipedia:
The Will Rogers phenomenon is obtained when moving an element from one set to another set raises the average values of both sets. It is based on the following quote, attributed (perhaps incorrectly)[1] to comedian Will Rogers:
When the Okies left Oklahoma and moved to California, they raised the average intelligence level in both states.
The effect will occur when both of these conditions are met:
  • The element being moved is below average for its current set. Removing it will, by definition, raise the average of the remaining elements.
  • The element being moved is above the current average of the set it is entering. Adding it to the new set will, by definition, raise the average....MORE
See also New Zealanders moving to Australia:
''New Zealanders who leave for Australia raise the IQ of both countries,''
— Prime Minister Robert Muldoon