Tags: Welch | unemployment | GDP | jobs

Jack Welch: Jobs Numbers Are Too Good to Be True, Imply 5% GDP Growth

Monday, 08 Oct 2012 10:09 AM

The September jobs report that showed the country’s unemployment rate fell to 7.8 percent from 8.1 percent is too good to be true, as such a number would suggest the economy is growing 5 percent, said former General Electric boss Jack Welch.

The economy grew 1.3 percent in the second quarter and 2 percent in the first quarter.

“I’ve been reviewing 14 businesses all week, and not one of them is showing stronger growth in the third quarter than they did in the second,” Welch told CNBC’s “The Kudlow Report.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

“It’s impossible that we can be running at a 5 percent [gross domestic product] growth rate, which is what this [7.8 percent] number is implying.”

The U.S. economy added a net 114,000 jobs in September, though the unemployment rate fell to a surprisingly low 7.8 percent as total employment rose by 873,000 in September following three months of little change, the Bureau of Labor Statistics said in its September jobs report.

Welch ignited a firestorm when the jobs figures were first released, suggesting on his Twitter page the numbers may have been cooked.

“Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers,” Welch said on his Twitter page, referring to President Barack Obama’s tepid performance in the first presidential debate last week.

Welch later downplayed his comments, merely suggesting that his research didn’t reflect the increase in hiring that the jobs report appeared to highlight.

“Perhaps the sharp improvement in the unemployment rate one month before the election was a total coincidence,” Welch said, adding that “this is probably the most important election of my lifetime and it shouldn’t be decided by one number.”

Welch’s Twitter comments, meanwhile, sparked a wave of debate over conspiracy theories involving the government cooking the data, which officials dismissed.

“This is a methodology that’s been used for decades. And it is insulting when you hear people just cavalierly say that somehow we’re manipulating numbers,” Labor Secretary Hilda Solis told CNN.

One economist attributed the drop in the headline unemployment rate to an increase in hiring of young Americans to work in this year’s political campaigns.

“We have observed a large rise in part-time employment, which arguably hints of the sort of temporary, part-time hiring that is often associated with political campaigns,” Deutsche Bank economist Joseph LaVorgna wrote in a note.

“In addition, we also observed a large +368k increase in employment of 20 to 24 year olds, arguably the demographic most likely to take part working on political campaigns. Indeed, we should note this was the second largest monthly increase in the history of this series.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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