Jobs and GDP in one chart
As Mark Doms, chief economist at the Commerce Department, points out, the fact that we had crummy GDP growth this quarter doesn’t mean much for jobs. In fact, as this chart he produced shows, it’s very hard to discern any relationship at all between quarterly GDP growth and quarterly job numbers:
Obviously, GDP growth does boost employment over time. The point of this graph is that the two numbers may not be related in any given quarter. As Doms explains, “the main reason is simply that quarterly changes in employment and GDP are volatile. Short-term numbers have a way of moving up and down a lot. That’s why economists emphasize longer-term averages that smooth out this volatility.” But before you get too excited, note that this week’s payroll numbers were the worst since January. The fact that one doesn’t predict the other doesn’t mean they both won’t be bad.