The September jobs report that showed the country’s unemployment
rate fell to 7.8 percent from 8.1 percent is too good to be true, as
such a number would suggest the economy is growing 5 percent, said
former General Electric boss Jack Welch.
The economy grew 1.3 percent in the second quarter and 2 percent in
the first quarter.
“I’ve been reviewing 14 businesses all week, and not one of them is
showing stronger growth in the third quarter than they did in the
second,” Welch told CNBC’s “The Kudlow Report.”
“It’s impossible that we can be running at a 5 percent [gross
domestic product] growth rate, which is what this [7.8 percent]
number is implying.”
The U.S. economy added a net 114,000 jobs in September, though the
unemployment rate fell to a surprisingly low 7.8 percent as total
employment rose by 873,000 in September following three months of
little change, the Bureau of Labor Statistics said in its September
jobs report.
Welch ignited a firestorm when the jobs figures were first released,
suggesting on his Twitter page the numbers may have been cooked.
“Unbelievable jobs numbers..these Chicago guys will do
anything..can’t debate so change numbers,” Welch said on his Twitter
page, referring to President Barack Obama’s tepid performance in the
first presidential debate last week.
Welch later downplayed his comments, merely suggesting that his
research didn’t reflect the increase in hiring that the jobs report
appeared to highlight.
“Perhaps the sharp improvement in the unemployment rate one month
before the election was a total coincidence,” Welch said, adding
that “this is probably the most important election of my lifetime
and it shouldn’t be decided by one number.”
Welch’s Twitter comments, meanwhile, sparked a wave of debate over
conspiracy theories involving the government cooking the data, which
officials dismissed.
“This is a methodology that’s been used for decades. And it is
insulting when you hear people just cavalierly say that somehow
we’re manipulating numbers,” Labor Secretary Hilda Solis told CNN.
One economist attributed the drop in the headline unemployment rate
to an increase in hiring of young Americans to work in this year’s
political campaigns.
“We have observed a large rise in part-time employment, which
arguably hints of the sort of temporary, part-time hiring that is
often associated with political campaigns,” Deutsche Bank economist
Joseph LaVorgna wrote in a note.
“In addition, we also observed a large +368k increase in employment
of 20 to 24 year olds, arguably the demographic most likely to take
part working on political campaigns. Indeed, we should note this was
the second largest monthly increase in the history of this series.”
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