Republicans and Democrats are both taking credit for last week’s better than expected jobs data, whereby nonfarm payrolls rose 151,000 in October.
The Economist’s Free Exchange explains why neither deserve credit:
In a week more saturated with political spin than usual, the air will be thick with competing policy explanations. Republicans will probably claim that private employers got their mojo back as they began to anticipate a more business-friendly Congress. That seems to require an improbably powerful link between current hiring decisions and a hypothetical political future. Similarly, the growth is inconsistent with the contribution of fiscal stimulus which has turned negative lately. The Fed might be able to take a bit more credit: the upturn in hiring seems to have coincided with the rally in financial markets that began when it hinted more quantitative easing was on the way.
I think the most plausible explanation is that private-sector employment had begun a decent recovery earlier this year, then lost steam because of the European debt crisis, the BP oil spill, and the fading contribution of fiscal stimulus. Those restraints have begun to lift. Data on factory orders, retail sales and car sales suggest a modest rebound began in the last few months. Indeed, retail employment rose 28,000 in October. The odds favour a continuation of decent job growth, though not as briskly as in October.
Thus more good news could be ahead, thanks to an independently-driven private-sector rebound.