For his February report on the January employment situation, Politico Morning Money's Ben White led off with a gloomy prediction:
WELCOME TO JOBS DAY: NUMBER COULD DISAPPOINT - Lots of downside risk to the January jobs number today given seasonal adjustments, end of year business closings and decidedly mixed recent economic data. Some very bullish analysts still call for a gain of 200K or more. But consensus is 145K, which may turn out to be a bit too high...Moody's Analytics Mark Zandi emails: "The January employment report will be on the soft side. I expect payroll employment to increase by just over 100K and private sector employment to increase by 125k. Unemployment will edge higher to 8.6%. The January report will reflect some pay back from the strong December report in which payrolls rose by closer to 200k. December was juiced-up by mild winter weather, adding to construction payrolls, and a seasonal jump in courier jobs related to strong growth in online retailing. Seasonal adjustment issues may also mean that some of the December gain in retail jobs will be reversed in January.
In fact, the payroll survey jumped by 243,000, and the unemployment rate dropped to 8.3%. Mr. Zandi and Mr. White were wrong.
Today it was the Wall Street Journal's "Ahead of the Tape" column that fell for Mr. Zandi, who this month was optimistic rather than pessimistic. Under the headline "Jobs News Could be So Good That It's Bad," the Journal pondered "what is likely to be yet another positive sign for the economy," and speculated on the effect on interest rates and markets "if the consensus expectation of 210,000 new jobs is met or exceeded."
Said the Journal:
Some observers remain skeptical of good jobs figures, pointing to contradictions from weaker tax-withholding data and the impact of a mild winter. Others are more sanguine. Falling into the latter camp, Mark Zandi of Moody's Analytics sees unemployment, recently at 8.3%, falling to just above 7% by the end of 2013.
This time around, in fact, the 120,000 increase in payrolls was "the fewest in five months," and "less than the most pessimistic forecast in a Bloomberg News survey in which the median estimate called for a 205,000 rise."
At a certain point, one starts to wonder why anyone pays any attention to these forecasters, or to the press that reports on them. Complex systems are hard to predict. Mr. Zandi doesn't seem particularly accurate at predicting the monthly payroll numbers. Neither do the professional journalists who do so for a living at places like Politico and the Wall Street Journal. Here's one prediction you can bank on: next month, when it is time for the Bureau of Labor Statistics to roll out its monthly numbers, there will be a preview article in some major news outlet that quotes Mark Zandi. Chances are, it won't be any more accurate than these two examples.
