As I’ve said before, the current U.S. economy is extremely confusing. Anyone who says they know for sure what’s going on is lying either to you or themselves. Many of the big economic indicators seem to contradict each other. (Is the economy good or bad right now? The answer is: yes!)
I keep hoping that additional months of data will reveal a clearer story. Unfortunately, new data releases, including Friday’s jobs report, continue to befuddle many of us who are supposed to be professional economic-opinion-havers. So with a bit of humility, I’d like to present a series of questions on a common theme: What the heck is going on in this economy?
Why are the jobs numbers still exceeding expectations?
Once again, unemployment tied a half-century low in April, and the net hiring number came in stronger than economists had forecast (253,000, as opposed to about 180,000). In fact, in 12 of the past 13 months, the jobs numbers have beaten expectations. It’s not unusual for forecasts to be off. But it is weird that they’re consistently off in the same direction — i.e., always underestimating the strength of the labor market.
I proposed several possible explanations to this puzzle almost two months ago, including measurement issues, a general bias toward pessimism, longer-than-expected lags in consequences for monetary policy tightening, etc. I’m still not sure which of those hypotheses is right. But there are some additional signs that measurement could be an issue; the report released Friday included not only new numbers for April but also some large revisions to data that has been released in prior months.
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For example, the March job growth number got revised down by about a third between the first imprint and this latest update. So it might be wise not to take the gangbusters preliminary estimate for April completely at face value.
Nonetheless, some numbers in this report are worth celebrating if they’re even close to accurate. That includes the record-low measure of Black unemployment and the record-high share of prime-working-age women who have jobs.
