Flurries of numbers shower Americans each month when the Bureau of Labor Statistics (BLS) unveils the latest economic data. The blizzard is left to the media and financial experts to interpret. Too often, Americans are fed headline numbers and little else, instead of contextual clarity.
Confusion has persisted about U.S. economic numbers since the Bureau of Labor began collecting and publishing employment and payroll data in October, 1915. Over time, the methodologies and terminology have changed, adding to the public bewilderment.
A looming presidential election likely will turn on economic issues, underscoring the importance of understanding the data. Wall Street and the media appear to have little interest in peering beyond the numbers, based on current reporting and the rose-colored economic forecasts.
Amid the dizzying amount of economic data, here are some current headline numbers that are ripe for interpretation
The pace of inflation is cooling.
The BLS reported inflation for August rose 0.6%, based on the Consumer Price Index. The monthly increase follows 0.2% upticks in July and June. August numbers indicate that inflation may be heating up again. The government is quick to point out gasoline prices accounted for the lion's share of the gain.
The media dutifully reports the monthly data in headlines without the same attention to the 12-month change in inflation. Prices have increased 3.7% since last August. That is higher than the 3.2% increase in July and 3.0% in June. Clearly, inflation is proving to be stickier than experts forecast.
To justify the narrative that inflation is slowing, the media and Wall Street remind Americans the current inflation is lower than the 8.0% inflation rate for calendar year 2022. True but hardly comforting to consumers.
Whenever the CPI drives up inflation, the media and Wall Street turn to so-called core inflation, the preferred measurement for the Federal Reserve. Core inflation excludes prices for food and energy because of volatility. Core inflation inched up 0.3% in August, which is 4.3% higher than August, 2022.
For average Americans, the core inflation number might as well be an unlisted telephone number. Americans don't have the luxury of excluding energy and food from their budget.
For further context, consider that inflation has risen 16% since January 2021, when prices roared at historic levels. Most consumers cannot quote that number, but they know their household budgets have been impacted more than the 0.6% August increase.
Workers wages are continuing to rise.
Americans' wages are riding an upward trajectory. Beginning in April of 2021, wages and salaries have risen steadily more than 3.4% every month, hitting 6.7% in July of 2022. That same month inflation was 8.5%. The latest available data for June shows wages and salaries climbed 4.7%.
February marked the first month since 2021 that wages grew faster than inflation, according to data compiled by Statista.
For hourly workers, the wage growth has failed to keep up with inflation for most of this year. June marked the first month weekly earnings rose faster than inflation. The latest data from July revealed average hourly wages are up 1.1% on an annual basis.
Hourly workers are falling further behind the inflation rate, which is the reason there are mushrooming demands from unions for higher wages.
Rising wages is usually a positive sign, but inflation has made today's dollar worth less. The BLS calculates that a dollar today only buys 88.6% of what it did in 2021. Inflation is sapping Americans purchasing power.
Job growth points to a healthy economy.
The economy added 6.7 million jobs in 2021, the largest annual total in U.S. history. That was followed by an impressive gain of 4.5 million last year. Year-to-date the economy has created 1.6 million jobs. That's a total for 12.8 million jobs in less than three years. An estimated 72% of the job growth represents jobs lost during the pandemic.
Average monthly job growth has moderated this year, despite the addition of 1.6 million jobs. The average monthly growth rate this year is 258,000 compared to nearly 400,000 last year. In the most recent report, the economy added 187,000 jobs in August. Job growth is decelerating.
Last year's booming job market wasn't as robust as the monthly numbers published by the media. That's because the BLS adjusts the figures each month. The trend has been that the adjustments wind up reducing actual job growth. The media usually downplays the data or ignores it.
For example, in March the BLS revised the job growth downward by 306,000. Do you recall reading or hearing that number? June and July numbers were reduced by a combined 110,000. Over the last three months, the economy recorded a modest average monthly gain of 150,000 after adjustments.
Unemployment is at historic lows.
In the latest report, the unemployment rate ticked up to 3.8%. The rate inched up from July's 3.5%. That still reflects a healthy job market. However, the BLS headline number for unemployment rate is just one indicator of employment. And it may not be the best.
A person out of work may not be counted as unemployed. The BLS unemployment figure does not include the following: 1. Millions of so-called discouraged workers. 2. The underemployed--part-time workers who prefer a full-time job. 3. Those who don't have a job but claim they have looked for one in the past four weeks.
To get an honest picture of the employment landscape, the BLS publishes a U-6 unemployment figure that measures the total number of employees who are part of the labor force, but without a job. For example, the U-6 rate was 7.2% in August, slightly higher than the July figure of 7.1%.
However, you will never read or hear about the U-6 data because it is entombed in rows of tables that are included in the monthly BLS unemployment report.
By now, you may be shaking your head and asking: "Does any of this really matter?" This writer believe it does. We are a nation of economic illiterates, unfortunately. (Excluding of course you dear reader.) That matters when the economy is the top issue with voters in most years.
Americans don't have to be economic experts. But an informed voter is best for our democracy. And the media and Wall Street are flubbing their responsibility to provide context and interpretation to help Americans digest the government data.
