There's not usually much intrigue over the monthly job numbers reported by the Labor Department. But that has changed all of sudden with a surprising surge of conservative critics who believe the September numbers, showing the unemployment rate falling three-tenths of a point to 7.8 percent, were cooked in order to aid President Obama's re-election bid.
Jack Welch, the former CEO of General Electric, initiated this intriguing conspiracy theory by tweeting after the report came out: "Unbelievable jobs numbers... These Chicago guys will do anything... Can't debate so change numbers." (I've cleaned up a couple of typos.) Though he didn't mention Obama, Welch was implying that the president, a product of Chicago's do-whatever-it-takes political culture, had ordered up a favorable jobs report to counterbalance his weak showing against Republican nominee Mitt Romney in the first presidential debate.
Welch has nearly 1.4 million Twitter followers, and his charge became instant news. A few fellow conservatives, such as Rep. Allen West of Florida, said they agreed with Welch that the number seems fishy. On CNBC, commentator Rick Santelli bellowed, "I told you they'd get it under 8 percent! You can let America decide how they got there."
This has kicked off a weird media back-and-forth about the Labor Department's survey methodology and other arcana that most ordinary people couldn't care less about. To summarize: It's hard to imagine how the dozens of career staffers who conduct the surveys that generate the monthly jobs report could all be in Obama's pocket, with nobody breaking ranks to blow the whistle. Besides, these reports tend to be volatile, with later revisions that often show earlier numbers to have been significantly off.
Beyond that, if Obama cooked the numbers, he did a lousy job. The improvement in the unemployment rate sounds good, but on the other hand, the economy created only 114,000 jobs in September, which is a weak showing that's way below the levels of the previous two months. The economy needs at least 200,000 new jobs each month just to keep up with population growth, so fudging it at 114,000 is like erasing the real grade on your report card and giving yourself a C.
But if that doesn't convince you that the September jobs report is unblemished, the next report probably will. That report is due on November 2, which is four days before the election. And economists are expecting a fairly weak report that could undercut the modestly good news of the latest release. "Because of the odd September numbers, the unemployment rate is expected to rebound to 8 percent or higher in coming months," Moody's Analytics predicts.
There are a couple of reasons for that. First, employers are growing alarmed about the "fiscal cliff," the big set of tax hikes and spending cuts that will go into effect in 2013 unless Congress does something to forestall measures that could slash GDP by 5 percent and kick off another recession. Most CEOs seem to think Congress will work out some kind of last-minute fix, but until they see it happen, they're putting off big decisions on hiring and spending.
The election itself is a cause of uncertainty, since economic policies could be quite different over the next few years if Romney happens to win. So companies are waiting on that as well, another reason for them not to hire.
The normal ups and downs of a weak recovery such as the one we're in also tend to generate herky-jerky job numbers. As hiring picks up, people who lost their jobs and simply gave up looking for work start to look again, which means they suddenly get counted among the unemployed. That's why the unemployment rate usually goes up for a while during a recovery, even as more people find jobs: The number of people counted as unemployed goes up, driving the rate up.
Finally, the job market remains weak, with 12 million people unemployed and a lot of others working part-time because they can't find full-time jobs. "The slack in the labor market remains huge," says forecasting firm IHS Global Insight. IHS points out, for instance, that despite an improvement in the unemployment rate, the latest jobs report contains plenty of troubling news. The number that measures underemployment, for instance, is still a sky-high 14.7 percent, with no change from the previous level.
If the November 2 report happens to show a big job gain of 200,000 or more, plus another drop in the unemployment rate and a lot of other improving numbers, it will definitely be suspicious. But it will probably show more of what we've seen all year: progress in some parts of the job market, stagnation in others. Revisons may also show that the latest numbers were an anomaly -- and that Jack Welch should think a bit more before he types.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.
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