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home : opinion : columnists June 28, 2016

11/7/2012 11:57:00 AM
Got jobs?
Brad Blackburn

The good news is that I finally have fantastic employment news to report. The bad news is that no one seems to believe it. Let's take the time machine all the way back to September, because that's where the real drama was. According to the blandly named "September Employment Report," during September, the unemployment rate amazingly dropped to 7.8 percent, from 8.1 percent. That was due in part to the creation of a whopping 873,000 new jobs -- the biggest one-month increase since 1983. All hail the Obama job creating machine!

I will readily admit that when I first saw that report, my thoughts were fairly cynical and may have been tinged with a few grunts and sighs. However, after a few moments, I retrieved the logical part of my brain and remembered that I don't believe in conspiracy theories.

It's hard to blame the skeptics though. During the first eight months of the year, the unemployment rate held to a tight range between 8.1 percent and 8.3 percent. What are the odds that it would drop precipitously to 7.8 percent, one month before the election? Adding even more intrigue, the two surveys that make up the employment report showed wildly different pictures. The "household survey" showed the aforementioned amazing growth, while the "payroll survey" was perfectly in line with recent history. A cynic would note that because the household survey is the basis for the widely publicized unemployment rate, a huge gain there could be incredibly valuable for a certain unnamed incumbent President.

While I understand the cynicism, I'm not willing to leap to the conclusion of what would be the biggest, most widespread political scandal in my lifetime. Luckily, there are other explanations; and those explanations may give us important insights into the state of the economy.

One key thing to understand is that the household survey is a volatile measurement best viewed over the long-term trend. Over the short-term, it can be overly impacted by many things, including part-time workers. In fact, 582,000 of the 873,000 jobs added in September were part-time. That is why the markets don't pay much attention to the household survey and unemployment rate. For example, the day the rate dropped to 7.8 percent, the S&P 500 was only up 0.35 percent. In other words, the markets were only mildly impressed.

However, the markets pay close attention to the payrolls survey, which has been showing consistently slow growth for months. According to that survey, while only 114,000 payrolls were created in September, in June and July, we actually created 86,000 more jobs than we previously thought. That's a significant upward revision, which is a good sign for the future.

Let's now fast forward to the equally blandly named October Jobs report, which was released just last Friday (November 2nd). While the unemployment rate actually jumped up to 7.9 percent, try not to pay attention to that. This was an even stronger report than the September report was. According to payroll survey (aka: the one we actually care about), 171,000 jobs were created in October. In addition to that, the report revised the August and September reports to add an additional 84,000 payrolls into the mix. That means that over the last three months, we are getting fairly close to the magical 200,000 jobs per month number that economists think we need in order to make a real dent in our employment situation. That's nothing to celebrate, but it's still progress.

The rest of the economy is looking a little stronger as well. We've seen recent solid reports on manufacturing, real estate, retail sales, services, consumer confidence and auto sales. Further, the Fed is still trying everything it can to goose the economy, and Europe has faded into the background for the moment.

None of this means we are headed for an economic boom. However, taken as a whole, we're looking at broad, slow growth. If you buy into that, it becomes far easier to see the astounding drop in the unemployment rate as a perfectly coincidental combination of a slowly improving job market, a modestly growing economy, and the fickle nature of the household survey.

While the wonderful drop in the unemployment rate may prove to be a fickle thing, I think it's a sign of positive momentum. I continue to believe that once we make it through the drama of the coming months; no matter who our president is, we may finally begin to see a real recovery.

Brad Blackburn, CFP®, is the owner of Blackburn Financial, Registered Investment Advisor. Blackburn Financial is located at 121 Cottage Ave, Cashmere. He can be reached at 509-782-2600 or email him at

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