Since none of you responded to my first post, let me try another one. It is an analogy. Suppose you gained 40 unwanted unsightly pounds. You decided to reverse course and lost 10 pounds over the last several weeks. Today you get on the scale and you gained back 2. What do you know? What should you do? The 2 pounds could signal that you are on course to start gaining weight again. It could be the signal of a bad trend starting.It could also be the result of weighing at a different time of day. It might have been caused by the extra water you drank after a vigorous exercise session. Your spouse might have sneaked behind you and stuck her cute little toe on the scale without you knowing. Truth is, just from the single reading you don't know much and you shouldn't get all wacky about it. You probably shouldn't change your behavior.
So what? This seems quite relevant to the way we think about monthly employment and unemployment announcements. Everyone knows the economy is performing a little better than it was a year ago. Everyone knows that firms who were burned by sales and profit declines and who have responded with major cuts and restructuring are NOT about to start hiring at the first signs of recovery. Everyone knows there is still a lot of uncertainty and lack of confidence. So what real relevance is one month's employment number in the middle of all this? When it comes to what really matters -- the real future course of employment and the economy -- what happened in February never was going to be much of a factor. Suppose they say they made a mistake and the true number was really much worse than reported? Would that really warrant a lot of consternation? I think not. It is just like the 2 pounds. We need to watch for at least a few more months before we make a judgment.