Illustration: Eniola Odetunde/Axios

Economists have long been disparaged for inaccurate predictions, but Friday's jobs report laid bare a new problem for the world's largest economy: questionable data.

Why it matters: Economic data is a crucial element in the movement of asset prices that determine what Americans pay for just about everything.

  • It's not just the stock market — the yield on U.S. Treasury bonds helps set rates for mortgages, student loans, credit cards and more.
  • Market moves also determine the value of assets like oil and the dollar, based largely on economic data.

Driving the news: The government's jobs report on Friday wasn't just much better than expected — showing the U.S. added 2.5 million jobs in May, 10 million more than economists predicted — it was full of inexplicable holes and numbers that contradicted other government readings.

  • To wit, as DRW Trading rates strategist Lou Brien points out, the Labor Department's unemployment insurance report showed that for the week ending May 16 there were 29,965,415 unemployed people receiving unemployment benefits.
  • The Labor Department's jobs report — which surveys individuals and businesses during the week of May 16 — found there were 20,985,000 unemployed people.
  • That would mean there were 9 million more people receiving unemployment benefits than there were unemployed people during the exact same survey week.

What they're saying: "Safe to say it is fair to be a bit skeptical of the numbers," Brien said in a note to clients.

Between the lines: The Labor Department also noted that only 35 states reported pandemic unemployment assistance numbers and just 22 reported claims for extended benefits during that week.

  • The extended benefits data was missing from the nation's second and fourth most populous states — Texas and Florida — suggesting the number of unemployed people is likely higher than the unemployment insurance data show, not lower by 9 million.

The big picture: Economic data is often incorrect or incomplete in its initial iterations, as it is based on human reporting and techniques as simple as making phone calls and filling out questionnaires.

  • What's different now is that the shock of the coronavirus pandemic is pushing the potential scale of error to previously unimaginable levels.
  • However, as Friday's trading action showed, the reports can still move markets.

The Labor Department's Bureau of Labor Statistics offered a bit of explanation for some of the irregularities in its numbers, pointing out that data collection for the jobs report was "affected by the coronavirus (COVID-19) pandemic."

How so: "Although [BLS regional data collection centers] were closed, about three-quarters of the interviewers at these centers worked remotely to collect data by telephone," BLS said in its May jobs report, also noting that no in-person surveys were taken during the month.

  • The pandemic led to a rate of responses to its survey of households that "was about 15 percentage points lower than in months prior to the pandemic."

There's more: The May nonfarm payrolls report included a “misclassification error” that would have made the unemployment rate "3 percentage points higher" than the reported 13.3%.

  • BLS said it was "investigating why this misclassification error continues to occur" as it's happened in the last three jobs reports.

Go deeper: Unpacking a surprise jobs report

Go deeper

Unemployment fell to 50-year low in 2019 but wages stagnated

Data: U.S. Bureau of Labor Statistics; Chart: Axios Visuals

Friday's jobs report missed expectations, but still delivered solid numbers, showing the U.S. economy added well over 100,000 jobs and the unemployment rate remained near a 50-year low.

The big picture: BLS reported that the number of people who were employed part time but would rather be full-time employees declined by 507,000 over the year.

Markets swell as the economy shrinks

Illustration: Eniola Odetunde/Axios

The economy is sputtering, but the markets are thriving — a highly unusual event that shows how the coronavirus has thrown all bets off.

Why it matters: The disconnect adds to the wealth gap. The richest 10% of households — who own 84% of stocks — are getting richer, while millions of out-of-work Americans cross their fingers that pandemic unemployment benefits will be extended.

America's worker deserts

Illustration: Sarah Grillo/Axios

The U.S. unemployment rate is so low that some cities and states have turned into "worker deserts" — places where companies can't find people to hire.

Why it matters: The "good news" story of the strong labor market has a big downside that is playing out in places like Iowa, New Hampshire and Florida, where companies say they can't keep up with business demand — hampering growth — unless they find more workers.