Every month this apparently has to be explained. So let’s explain it again
Non-farm payrolls, or establishment survey. The zero jobs created is derived from a survey of 10s of thousands of employers nationwide. It is derived from the payroll amounts these private and government employers report to the BLS. This only counts people who do not work on farms.
Jobless rate, or household survey. The unemployment rate is derived primarily from a survey of households. This survey asks people several questions, primarily, do you have a job or don’t you have a job. And are you actively looking for work if you don’t. The jobless rate is the ratio of people who are defined as out of work but looking for a job divided by the labor pool.
Jobless claims. The weekly jobless claims is derived primarily from first-time filings of unemployment benefits, along with continuing claims for unemployment over a longer period of time. This survey only measures people who have lost their jobs or can’t find work. It doesn’t measure people who have been hired or have jobs.
3 surveys. telling us three things. measuring 3 different things. measuring things in different ways. They are not directly related to each other.
-George
Anecdotal evidence regarding the employment situation:
I have a friend who has had a job placement business for 20+ years. I had dinner with her the other night and she said that when we have bad economic news (major stock meltdown for example), she will often lose a handful of her contracts to hire new employees. On the day of the S&P downgrade, she lost 100% of her contracts. Everyone of her clients decided that day that they would not take the risk of adding more employees. These employers ranged from small to mammoth and were located nationwide.
This is just one small operation. I’m sure this scenario was repeated across the US, and I’ve been waiting for these numbers after our dinner, knowing after our conversation that they would be horrible.