Unemployment Surprise

Byline: Alfred Tella, SPECIAL TO THE WASHINGTON TIMES

The spike in the unemployment rate from 5.7 percent in July to a five-year high of 6.1 percent in August left forecasters with egg on their faces. No change or a slight uptick had been expected.

Even with the 84,000 August drop in nonfarm payroll jobs, the eighth monthly job decline in a row, last month's jump in unemployment was out of proportion to the weakness in employment. There are lags and catch-ups in economic data, so one month doesn't tell the story. A closer look shows the employment-unemployment relationship has been out of historical whack all year. Insofar as economic forecasters are empiricists who rely on past behavior for guidance, recent underestimates of joblessness are understandable.

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Unemployment Surprise. Contributors: Not available. Newspaper title: The Washington Times (Washington, DC). Publication date: September 9, 2008. Page number: A21. © 2009 The Washington Times LLC. COPYRIGHT 2008 Gale Group.

This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.