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October jobs report: The economy is doing better than we thought

The very last jobs report before the election is out — and the numbers are fairly positive. The U.S. economy added 171,000 payroll jobs in October, according to the Bureau of Labor Statistics. That's more than economists expected. What's more, the labor market was healthier in previous months than we'd originally thought.


Remember that dismal August when everyone thought the U.S. economy had only added 96,000 jobs? After updating the numbers, BLS now estimates that we had actually added 192,000 jobs. And September, too, got revised upward from 114,000 to 148,000.

It's a reminder that the initial payroll numbers often get revised as more companies report their data. And lately the monthly jobs numbers have been getting revised upward by a fair bit in subsequent months. That shouldn't be too surprising, writes labor economist Betsy Stevenson: "Why are so many revisions upward right now? Because revisions are more likely to be up in a recovery."

In the past three months, the economy has added 170,000 jobs per month, on average. The unemployment rate ticked upward slightly to 7.9 percent last month, but mainly because 578,000 additional Americans entered the workforce looking for work. That, too, is encouraging — it's a better sign for the economy if people are actively looking for jobs rather than sitting at home utterly discouraged. (Conversely, when the unemployment rate falls solely because people are dropping out of the labor force, as happened earlier this year, that's a bad sign.)

For those who prefer gloomy news, there's still plenty of that in the jobs report: There are still 5 million long-term unemployed, who have been out of work for half a year. That number didn't budge last month. Wages have grown at just a 1.4 percent annual rate over the past three months, slower than last year. And even if the economy does continue to add 170,000 jobs per month, it will still take a decade to get back to full employment, according to the Hamilton jobs calculator. The economy may be doing better than we thought, but it's very far from fixed.

That said, the last three months do suggest that the U.S. labor market is on an upward trajectory. Unless Congress fails to avert the fiscal cliff and throws the economy back into recession in January, this is another indication that, as Ezra has written, whoever wins the presidential election next week will likely get to take credit for the recovery that's now underway.



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Ezra Klein · November 2, 2012

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