Data Point - Sequestration effect on employment - Granite Grok

Data Point – Sequestration effect on employment

Sequestration effect on employment

The federal government shutdown may have distorted the US employment report for October — but not the US economy.

Blowing away expectations, the Labor Department reported a surprisingly large 204,000 gain in October non-farm payrolls vs. a 125,000 consensus. Add in a combined a 60,000 upward revision to job gains in August and September and the three-month average is 202,000 vs. 154,000 in the August-October period in 2012. Capital Economics:

Apparently, the near three-week Federal government shutdown had little, if any, impact on payrolls. Manufacturing increased by a healthy 19,000, construction increased by 11,000 and retail increased by 44,000. … the US economy appears to be overcoming a summer swoon.

Now those numbers are from the establishment survey, which counted furloughed government workers as employed. The smaller household survey did not, and it showed. The unemployment rate ticked up to 7.3%, while the labor force participation rate and employment-population ratio fell sharply. But as Capital Economics points out, “With those Federal employees back at work now, however, all of this will be reversed in November’s report.”

So for this monthly only, Republicans will look to the bright side of the monthly jobs numbers — “See, the government shutdown was a non-event” — the Democrats the opposite. Of course the counterfactual here, one Democrats will try and sell, is that even more jobs would have been created without the government shutdown. Indeed, the Obama White House seems to like counterfactuals. Recall the “jobs created or saved” metric to judge the stimulus.

I hardly see even a blip in this chart – nothing that suggests that the economy even sees the 15% “Slimdown” (aka “Government has gone away!!!”).  In fact, I would bet (not being an economist) that if the taxes collected had also gone down 15%, the economy might have actually gone up.  After all, if the folks that actually earn the money have a little more jingle in their pockets (some to savings, some to paying down debt, help that side of the equation), some of it might well have been spent.  Bastiat’s Broken Windows syndrome.

(H/T: AEIdeas)

>