Another record-setting employment report, but what record exactly?

Friday, December 5, 2008

The November employment report was nothing but treacherous. The monthly nonfarm payroll fell 533,000, and the decline was broad-based. The goods-producing industries slashed another 163k jobs, while service industries cut more , 370k, which alone exceeds the market's expected decline in total nonfarm payroll , 300k.

There is absolutely no silver lining in this report, except that the last two men standing are education and health care and government, who added 52k and 7 jobs, respectively. But even those giants are subject to fall. The labor market is sliding off a cliff and setting all sorts of records along the way. However, the size of the record - 34 years or 28 years - depends how you measure the decline.

Obviously the media wants the biggest record possible:

U.S. job losses worst since 1974 as downturn deepens

…It's not true in percentage changes. The monthly percentage decline is the worst since 1980.

Somehow the media’s headlines sell better than would mine, but mine is a better representation of the proportion of the decline. A percentage change relates the magnitude of the payroll drop to the size of the payroll, which changes over time.

To be sure, the report was certainly troubling. A weak labor market – scratch that – a weaker-than-expected-and-set-to-worsen-futher labor market throws fuel on an already burning housing market and openly combusting consumption. But if the economy is going to get gloomier, why not wait to set the bigger record then?

Rebecca Wilder


Irrational Doomsday Blog December 6, 2008 at 9:43 AM  

Well here's the deal.

Is it newsworthy? Yes.

Is it factually accurate? Yes.

Is it misleading? No. Here's where you and I disagree I'll wager, so here's why I have my opinion.

The fact that it could have been presented in a slightly (and I do mean slightly) more positive light by looking at the number relative to the size of the job market doesn't actually indicate media bias. In fact, if they would have headlined it the way you suggest, I would have been inclined to read media bias the other way- trying to paint a slightly rosier picture, possibly as propaganda to indicate things really aren't so bad. The jobs numbers were incredibly bad, and I think those stories reflected it.

As far as how the media is always going to function:

Which is more attention grabbing as a headline- "Michigan football posts worst season ever" or "Michigan football posts worst season since length of schedule adjusted to current number of games." The answer is clear.

You ask "why not wait until the bigger record?"- which I agree is on the way.

Because this way they can get more records into headlines as attention grabbers- you can't really wait on the next record to start reporting, either. There's no guarantee it will come, even if it's highly likely.

"Worst Job Loss since 1976"
"Worst Unemployment since 1390"
"Worst Economic Conditions since stone age"

The editor isn't going to look at #1 and say, "nah, don't publish yet, I'm waiting till #3."

Flow5 December 6, 2008 at 11:39 AM  
This comment has been removed by the author.
Anonymous December 8, 2008 at 1:48 AM  

People in power and most salaried ecomonists/analysts do not understand what is happening because they think within the confines of an economic paradigm based on ever-expanding debt levels of all economic subjects. That economic model is rapidly folding. It can not be saved. "New Deals", bail-outs, rescue packages etc. will fail. Chaos will ensue.

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