THE JOBS MARKET is not collapsing, as panicked investors were led to believe last month when the government reported that the economy had lost 4,000 jobs. Well, it turns out that the early tallies were wrong, and that the economy actually added 89,000 jobs in August. Yet the published, incorrect data triggered talk of recession, the need for Fed rate cuts, and a panic on world stock markets.
So what are we to make of preliminary data that suggest that we added 110,000 jobs in September? Not much. My colleague at the Hudson Institute, Diana Furchtgott-Roth, is an expert on these sorts of labor market data. She points out that the Labor Department rushes these numbers out at a pace unknown in any other country. Moreover, no one seems to complain when retail sales data, or housing data, are published in the middle of each month, instead of on the first Friday, thereby giving the compilers a bit of time to get things closer to right.
This seemingly geeky technical point matters. In the febrile conditions prevailing in financial markets, misinformation is dangerous stuff. It creates political pressure on the Fed to lower (or raise) interest rates; it leads politicians to press for legislation affecting mortgage markets; it causes broadcasters in the 24-hour business news to "foam at the mouth and run," to borrow from Noel Coward, causing unnecessary volatility in share prices and interest rates.
"We have to get the news out on time," says Ed Lazear, chairman of the President's Council of Economic Advisers. True -- but not if the real news is that the news being put out is wrong.
If the new data hold up -- a great big "if" -- the number of jobs in the American economy will have increased for 49 consecutive months, breaking the record set in the late 1980s. This, despite a fall-off in construction jobs due to the problems in the housing market, and the loss of 14,000 jobs in the financial services sector as firms laid off their mortgage-writers and related staff. But hold your cheers until the revisions come in.
Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD , director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).