The countdown for the US presidential elections has already begun and in the second segment of our special series we are going to discuss, unemployment. The first one we discussed was housing. The biggest challenge gripping the American economy today is, unemployment.
The countdown for the US presidential elections has begun with housing and unemployment being key poll issues. In an interview to CNBC-TV18, Gad Levanon, Director – Macroeconomic Research at the Conference Board says the September jobs data showing marked improvement in employment scenario may not have been manipulated, but he is disappointed by overall job scene in the US.
Levanon, who also leads the labour markets programme, however, believes that the employment situation will worsen in days to come.
Here is the edited transcript of Levanon's interview on CNBC-TV18.
Q: What is your opinion on the fact that last night’s debate was expected to be President Obama’s comeback? And do you think he made a comeback?
A: I think it was an interesting debate probably the most interesting so far and I wish both of them luck.
Q: Earlier this month when jobs data was released we got a comment from Jack Welch, who said that he believes that the data had been manipulated by the Obama camp or the data was incorrect. Did you expect the unemployment rate to drop down to 7.8 percent? Do you suspect manipulation or do you think the data gathering process is not robust enough?
A: I was surprised, but have no doubts that there is no manipulation going on. In fact if you look at the average growth rate or the average changes in employment in the household survey, employment was growing similar to the employment in the payroll survey. So the fact that employment grew rapidly in September was one month’s blip and doesn’t signal any major divergence between the two surveys. The overall employment growth was disappointing and the decline in the unemployment rate is more due to the baby-boomer retiring than any strong growth in employment.
Q: Many analysts will bear you out because they have been saying that while the headline numbers may point towards a recovery the underlying data points to a weaker jobs number and a weaker jobs situation. So new part time jobs have dominated the household survey in September, goods producing jobs actually fell. The National Federation of Independent Businesses Index of Employment softened in September as did Monsters Employment Index. So what do you think is the accurate jobs picture both in terms of unemployment rate and in terms of jobs being added on a monthly basis?
A: In the past four years United States has experienced a soft patch since the spring in economic activity which is now reflected in employment. So if you look at the six months growth rate of employment, it is slowing down quite significantly and I expect that it would continue to slowdown in the first quarter. We have the employment index, which is an aggregation of the eight best leasing indicators of employment and in the last two months this index went down. The employment conditions in the United States are not good and we will see even slower job growth through the first half of 2013. Again with unemployment it is declining but more because of the baby boomers retiring then any stronger employment growth.
Q: You are painting a far worst picture for the jobs situation than any one of us anticipated. According to you the data currently does not fully reflect the grim situation, and over the next few months the unemployment rate is not going to move down and the addition to jobs will not be spectacular?
A: Yes, that is correct. I think through the first half of 2013 we will see disappointing job market in the United States.