It’s a bit rich listening to people like Jack Welch and Hank Greenberg disparaging the US September employment reports by suggesting that the numbers were doctored. This wouldn’t be the same Jack Welch of GE who, when CEO, miraculously used to produce quarterly earnings within a penny of what the Street was predicting. Or the same Hank Greenberg, late of AIG, whose company essential help to manufacture a near financial Armageddon via his company’s aggressive “insuring” of credit default swaps (which they could no more insure credibly than the Saudi Arabians could lecture the world on the virtues of religious tolerance).
Conspiracy theories inevitably abound during a tight Presidential race, and it’s also the case that most of the increase in the household survey measure of employment was due to an increase in part time workers, making it a “spurious” improvement, according to critics like Welch and Greenberg.
As to the first point, it beggars belief that the White House would blatantly doctor the employment numbers so transparently a mere 35 days away from an election. Surely, they would have started this process months ago when this wouldn’t be so transparently political, if that was indeed going on.
As to the 2nd point, yes it is true that of the overall 873,000 job gain, 582,000 was attributable to an increase in part time workers. The implication is that household survey employment growth is not genuine because it is due mostly to a rise in part time workers.But as Frank Veneroso has noted:
“For the single September 2012 report, that is true. But it is not true for the underlying trend in this data. Year over year, the total household measure of employment has risen by 2,867,000. Part time workers over that 12-month period have actually fallen by 657,000. In other words, on a smoothed basis the roughly 2% increase in total household survey employment has been due entirely to an increase in full time employees and the number of part time workers has fallen significantly. I should also add that the employment-to-population ratio over this 12-month period has risen from 58.4 to 58.7″.
Veneroso also notes that as a result of the upwardly revised private payroll data for the 12 months ending in March of this year, theon average for those 12 months private payrolls rose 217,000 a month and hours worked for the overall period rose at a 3% annual rate. His conclusion:
“This is a surprisingly strong performance, and miles away from current belief that we have been in a very weak job market. We had an economic expansion encompassing 2003 through 2007. Hours worked did not reach a 3% year on year rate of gain in 2003, in 2004, in 2005, and in 2007. Only in 2006 for eight months did they reach or exceed the 3% threshold and peak at 3.5%.”
This isn’t the only straw in the wind. Over the past several weeks, we’ve also had better readings in the Bloomberg weekly US consumer comfort index, and the Conference Board consumer confidence survey indicates that job prospects look better to consumers than they did on average during the 12 months through March when private payrolls increased at an average rate of 217,000 a month.
So there is a lot of solid evidence which largely confirms the employment data, notwithstanding the Jack Welch and Hank Greenberg tirades to the contrary. If anybody has a ropey record of making economic forecasts, it’s Jack Welch, if these two recent episodes are anything to go by:
Jack Welch – Interviewed January 19, 2007
Q: What do you think of analysts who predict we’ll be in recession in six months?
A: They should find another line of work.
Q: Do you think sentiment is too bullish?
A: I’m not here as a market timer. I’m hear to tell you this economy’s in one helluva good shape.
September 25, 2008
NEW YORK (Reuters) – Former General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) Chairman and Chief Executive Officer Jack Welch said the U.S. economy faces a deep downturn in coming quarters, and he supports a proposed $700 billion government rescue package for the financial sector.
“I now believe we are in for one hell of a deep downturn,” Welch told the World Business Forum inNew Yorkon Wednesday, adding that the first quarter of 2009 will likely be “brutal.”
Okay, so the shareholders of GE didn’t pay “Neutron Jack” for his economic forecasting abilities. But the man’s ability to massage his company’s quarterly earnings during his tenure as CEO does lead one to think of 3 words when listening to his tweets about the latest employment data: pot, kettle, black.