MacroScope

U.S. jobs data marks gloomy hat-trick for economists

June 1, 2012

By Sarmista Sen and Sumanta Dey

 

Economists predicting jobs growth in the United States, or rather the lack of it, scored an unfortunate hat-trick on Friday – vastly overestimating the rise in payrolls for three consecutive months.

The U.S. economy added 69,000 jobs last month, less than half the Reuters median for a gain of 150,000 jobs and missing even the lowest forecast of 75,000 from nearly 80 economists .

Forecasters last achieved that feat between April and November 2008, when the actual NFP number consistently missed the lowest forecast in the survey, for eight consecutive months.

Although the great recession had taken hold of the U.S. then, and economists were predicting job losses, the actual number always showed deeper job cuts than what the most dovish economist foresaw.

“It’s difficult to shrug off the correlation,” said Hugh Johnson, an U.S. economist who forecast the lowest payrolls gain of 75,000 in the May survey, referring to the present slow rate of growth and the economic turmoil that existed in 2008 with the onset of the crisis.

“The reason for that is it takes time to dissipate optimism and there was a significant level of optimism built from December to February about jobs growth. We’ll see economists catch up and those forecasts start to turn down,” he added.

The U.S. economy grew at an annualised rate of 1.9 percent in the first quarter.

“There’s not much room between the growth rate of the U.S. economy and zero. We’re getting closer and closer to a contraction in the economy and I’m trying to remain optimistic but it’s becoming extraordinarily difficult to do that.”

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