Answer: Nothing.

I read a headline today that noted the unexpected net drop of 4,000 jobs by U.S. employers in the month of August. In this current climate of growing media panic about the collapse of the housing market, mortgage lending, and now credit lending in general, this would seem like another indication that the national economy is currently swirling in the bowl. But there were a couple lines in the article that got my attention:

1) The drop of 4,000 jobs in August was the first decline since August 2003.

Hmmm. What was happening in 2003 that could have resulted in such an ugly statistic. As I recall, we were in early stages of one of the greatest real estate booms in the history of the country. We were also engaged in what, at that point, was still a fairly popular foreign war. Both of these things would indicate that the economy was pretty strong in 2003. Yet, there was a monthly loss in U.S. jobs. Makes me think that jobs data may not be the best indicator of economic performance.

2) The 4,000 jobs cut in August are from both private and government employers. The government actually cut 28,000 jobs, while all private employers added 24,000.

So it wasn’t the local manufacturing plants that were brazenly chopping jobs to pay off debt, it was the government cutting 28,000 jobs for who knows why. Another important piece of information when determining what this type of jobs data really means to most of us.

Bottom line here is that economic data is one of the easiest things for the media to sensationalize and it can be presented and interpreted in literally any way that one wishes. I know I’m not going to worry too much about it.

Source: Employers Cut Jobs in August

Update: I was recently introduced to a great article to help in the understanding some of the economic jargon that continually spews out of the Fed and other governing bodies: When the Fed Says X, They Really Mean Y (A Handy Translation Book). Thanks, Rich.

Tags: employment statistics, job market, jobs data, understanding the fed, unemployment statistics

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