Humility for forecasters: Jobs shocker is record miss
Economists were projecting that May's jobs figures would show a loss of 8 million jobs and an unemployment rate approaching 20% — Great Depression territory.
The state of play: Instead, a record 2.5 million workers were added, and unemployment fell to 13.3% from April's post-World War II high of 14.7%.
- Wall Street loved it: The Dow and S&P enjoyed the best week in two months; the NASDAQ 100 set a record. (CNBC)
This was the biggest-ever Jobs Day whiff by forecasters:
- Before Friday, Bloomberg News reports, "the biggest single-month miss on the payrolls report was 318,000 in February 2003, according to Bloomberg survey data going back to 1996."
How it happened: Gregory Daco, chief U.S. economist at Oxford Economics, told Bloomberg that this economic downturn — sharp and swift due to the shutdown — is "a very, very different animal" than other downturns.
- Forecasters "have to remain humble in the face of all the tremendous uncertainty," Daco said.
- The Bureau of Labor Statistics said in Friday's fine print that a "misclassification error" by surveyors means the actual unemployment rate could have been "about 3 percentage points higher than reported," not seasonally adjusted. (Go deeper.)
Chris Rupkey, chief economist at MUFG in New York, told Reuters: "It took years for the economy to grow enough to find jobs for those unemployed in the last recession, and it will take years again this time to do the same."