Journal Reporters Analyze Jobs Report

Journal Reporters Analyze Jobs Report

New Model to Predict Unemployment Sees Rate at 8.1%

By Ben Casselman

The big monthly jobs report doesn’t come out until Friday, but no need to wait until then to know September’s unemployment rate: 8.1%.

At least, that’s the best guess of economists Regis Barnichon and Christopher Nekarda, who in a paper last month laid out a new method for forecasting the unemployment rate. Mr. Barnichon, of the Spanish research institute CREI, and Mr. Nakarda, of the Federal Reserve, plan to start posting unemployment projections based on the new technique in the coming months. Until then, they provided Real Time Economics with a look at their forecast for Friday’s jobs report.

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Why Did the Unemployment Rate Drop?

By Phil Izzo

The U.S. unemployment rate tumbled to 7.8% in September but a broader measure was flat at 14.7%.
The decline in the main unemployment rate was driven by positive factors. In previous months, the rate has fallen because more Americans were no longer looking for work. That wasn’t the case in September. The labor force increased, as more people were seeking jobs. Meanwhile, the number of unemployed tumbled by 456,000, while those with jobs surged 873,000.

That number may come as a shock, considering that the number of jobs in the economy rose just 114,000 last month. That’s because the number of jobs added to the economy and the unemployment rate come from separate reports. The number of jobs added comes from a survey of business, while the unemployment rate comes from a survey of U.S. households. The two reports often move in tandem, but can move in opposite directions from month to month.

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