At the onset of Hurricane Sandy Monday morning the Wall Street Journal indicated that the Bureau of Labor Statistics ("BLS") might delay this Friday's updated employment situation report. The right wing -- hilariously convinced that last month's surprising .3% dip to 7.8% was part of some absurd Obama conspiracy -- has long assumed that the employment situation this month will "correctly" show unemployment ticking up to reflect its true number of 8.0%+.
Join me after the flip to see why the righties should be wishing that the report stay delayed until after the election.
Aside from Superstorm Sandy or an unexpected surprise,* the last event with the potential to significantly impact the election is the BLS employment situation report set for release on the morning of Friday, November 2. This report uses survey evidence to estimate how many jobs were created (or lost), how those jobs are distributed among sectors, what adjustments need to be made to previous months estimates, and the present unemployment rate.
Since mere survey evidence is used as the basis for the BLS report it stands to reason that other entities might have an inkling of what the BLS data will look like before it's released. Indeed, there are three important sources that I've been following this fall: (1) the Gallup Daily tracking survey; (2) the ADP/Moody's survey; and (3) surveys of economist expectations from various outlets.
* I'm still waiting for the Romney blackmailer to release the tax returns!
1. Gallup
Gallup's jaw-dropping predication ahead of Friday's report?
Gallup Daily tracking data suggest the government could report another decline in October, as opposed to the consensus forecast for a slight increase to 7.9%. Gallup's adjusted unemployment rate fell to 7.5% in October based on more than 30,000 monthly interviews completed through 30 days ending Oct. 28. If the government's numbers follow a similar pattern, the BLS will report a 7.4% unemployment rate for October.
The Gallup survey generally tracks the trends in the BLS unemployment rate as shown in this graph below:
The Gallup numbers aren't perfect though. Gallup has regularly been off by a few tenths of a point over the last 19 months. Specifically, it overestimated the unemployment rate 14 times with its worst month being +.9% the BLS rate. It underestimated only 5 times with its worst month being -.6%. Overall, it tends to overestimate the BLS figure by .2% (which is good for us).
Assuming the past trends signify a kind of bias on the part of the Gallup survey we can expect Friday's unemployment range in the ballpark of 7.3%-7.5%. Amazing, right? I know. Maybe too amazing. Even under a worst case scenario, however, where Gallup is underestimating the unemployment rate by -.6%, we would see the BLS rate tick up to the September number of 8.1%. But that's like the worst case scenario reasonably imaginable. Regardless, a drop in unemployment is more likely in light of Gallup's past performance.
What about the other indicators?
2. ADP/Moody's
The ADP/Moody's report is set for release on Thursday, November 1. I have scoured Google News, Twitter, and some blogs and haven't unearthed any rumors on this front. Sorry! I will note, however, that ADP was anticipating 200,000+ job growth last month that never materialized in the October BLS report. If that carries over to this month we may be in for a treat. Keep your eyes on the blogs today and take note of the ADP/Moody's survey when it's released tomorrow to see if it confirms or conflicts with the Gallup numbers noted above.
3. Economist Surveys
I caught this survey of economists from Reuters today, which is seemingly at odds with the Gallup numbers:
Coming four days ahead of the tight contest, the closely watched employment report on Friday is not expected to shift much from its recent pattern, limiting its impact on voters.
Employers are expected to have added 125,000 jobs to their payrolls in October, up from 114,000 in September, according to a Reuters survey of economists. The unemployment rate is forecast to tick up a tenth of a percentage point to 7.9 percent after a dramatic 0.3 percentage point fall in September.
This expectation is based on the gut instinct of the surveyed economists and whatever anecdotal information they can access. Honestly, that's where my gut would be too. So who's right? The Gallup survey or the Reuters economists?
4. Other Economic Indicators
Other economic indicators this last month have been somewhat mixed but overall appear strong. Most notably, the Thomas Reuters / University of Michigan Consumer Sentiment survey of consumers found "record gains in consumer confidence" in October. Additionally, GDP was a modest but healthy 2% this quarter. By contrast, the stock market struggled on revived EU fears and concerns about the US fiscal cliff.
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So what will the Friday BLS employment situation show for the unemployment rate? Nobody knows. I'm cautiously optimistic that we'll see a further dip, and I think it's just as likely that we'll see a significant dip as we will see an uptick. Got my fingers crossed. Whatever happens on Friday, from today's perspective the righties should really be careful what they wish for because they are probably going to get their numbers on Friday and it is far from guaranteed that they will like what they see.