Can We Trust The Employment Statistics?

Welcome to a new post on real estate economic analysis. I’m Victor Menasce. In this post, we’ll dissect and analyze recently released employment statistics. This analysis is important given that employment indicators greatly affect real estate investing and overall economic health.

Evaluation of Recent Employment Statistics

Recently, surprising economic news made front-page headlines. The Wall Street Journal reported on American employment statistics, indicating a considerable increase in job numbers and wages. However, the U.S. unemployment rate also increased. Conventional wisdom suggests that in a robust job market, unemployment should not be rising. But what did the data really say? Let’s get into the specifics.

The Establishment Survey vs. the Household Survey

Within the monthly economic data are two important surveys – the Establishment Survey and the Household Survey. The former asks employers about their hiring status, while the latter asks families about their income and employment situation.

Despite the optimistic employment growth reported in the Establishment Survey, the Household Survey painted a different picture. The number of unemployed increased by 157,000, and the number of people who declared themselves as employed decreased by 408,000. Quite simply, the math does not add up. If the number of people unemployed is increasing, the number of employed is decreasing, and the labor force is shrinking, how could 272,000 jobs have been added to the economy?

Overlooked Realities in the Healthcare Sector

Diving deeper into the data, the health care sector reportedly created 68,000 jobs. However, this too has some discrepancies. Nurses comprise about 52% of the health care workforce, and seven out of the 20 fastest-growing occupations are in the nursing industry. Yet, a third of the nursing workforce are considering leaving the profession. Nursing schools are not graduating enough individuals to replace those retiring over the next decade. With registered nurses having a projected 10% shortage and licensed practical nurses a 7% shortage, the reported growth in health care jobs is mystifying.

The Real Unfolding Situation

Given the contradictions and the revisions in the Establishment Survey report each month, how reliable are these figures? Moreover, the worsening unemployment is a red-flag for the Federal Reserve and could prompt necessary actions for stimulating job growth. Considering the reported job losses over the past six months, the Fed may need to revisit its monetary policy sooner rather than later.

Category Contributing Factors
Employment Statistics Discrepancies Variances between the Establishment Survey and Household Survey, possible over-reporting in the healthcare sector, continual revisions of job numbers
Projected Nursing Shortages Current nursing workforce considering leaving the profession, not enough nursing graduates to replace retirees
Urgent Need for Fed Intervention Increase in unemployment rate, a steady job market contraction over the last six months

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