Mark Zandi and Others Wrong on Jobs Data

For the second month in a row, the jobs report was a major disappointment. The January jobs report, released Feb. 7 by the Bureau of Labor Statistics (BLS), [1] showed only 113,000 jobs added, falling far short of the more than 180,000 expected. The unemployment rate dropped to 6.6 percent.

The miniscule revision of 1,000 jobs to the December report compounded the shock. Many had dismissed the December report of 74,000 jobs added claiming it would be revised upwards with this report.

Liberal economist Mark Zandi was one of the people “very sure” that December’s weak jobs number would be revised “up and revised away.” Later he explicitly stated his view that the U.S. is seeing “200k monthly job growth.” The latest BLS report showed differently, although further revisions are possible.

When the December jobs report was released, economists contributing to financial media outlets dismissed the figure, saying it would be revised upwards. Zandi, Chief Economist of Moody’s Analytics and a frequent contributor to CNBC, immediately dismissed the number on CNBC’s Jan. 10, “Squawk Box.”

He said, minutes after the BLS release, “I wouldn’t pay any attention at all to these numbers,” continuing “next month this will be – we’re gonna get the benchmark revisions and they’re gonna be all revised up and revised away.”

A few minutes later he reiterated his position, saying he was “very sure” that a revision would come. Later in the same show, CNBC host Andrew Ross Sorkin asked Zandi “take us a month out. What do these numbers, if you think it’s all adjusted, what does the adjusted number look like?”

Zandi responded immediately and firmly: “It’s 200k, we’re at 200k monthly job growth.”

In that same broadcast, Austin Goolsbee, Professor of Economics at the University of Chicago and former senior economic policy advisor to President Obama, agreed with Zandi, saying “Mark is right. It’s probably too extreme.”

Other media outlets ran similar claims. Jared Bernstein, another liberal economist who worked with Vice President Joseph Biden between 2009 and 2011, wrote in [2]T [2]he New York Times [2] that the December jobs numbers “will later be revised upward” and quoted an anonymous economist who called the data “the wild payroll number.”

Zandi’s prediction also missed the mark in January. He was looking for 170,000 jobs in the report that showed only 113,000. Still, he doubled down on his previous statements telling “Squawk Box” viewers that “we’ll get more upward revisions for the December number when it’s all said and done.”

It is too soon to tell whether next month’s revisions will prove Zandi right or wrong again. But his insistence to explain away signs of economic weakness is unsurprising given his history of promoting Obama’s economic policies [3]. During the debate over the president’s stimulus program in 2009, Zandi said, “The fact that policymakers are working really hard here, I think, is a reason for optimism.”

In addition, Zandi has tried to spin jobs reports [4] before. When confronted with weak data in April 2012, he tried to “find some silver linings in the [jobs] data,” saying “the worst of the layoffs are behind us.”

Not all economists made such inaccurate predictions. James Sherk, the senior policy analyst in labor economics at the conservation Heritage Foundation, was skeptical in January that the jobs numbers would be revised upwards. In a Jan. 10 interview with BMI [5], he admitted that the data “may be an outlier” but said “I highly doubt you will see revisions of that magnitude.