BLS Scraps October Jobs Report on Lack of Household Data

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00:00How much of a surprise is this? We knew that there was going to be parts of the report that

00:04were missing, but to just wholesale cancel the October jobs report? It is a little bit of a

00:08surprise, especially because businesses are able to keep their records. How many folks were on

00:13their payrolls? And so when you ask businesses, how many people were on your payrolls for the week

00:18that included the 12th of the month, they should have pay stubs, they should have HR records. It

00:23should be relatively easy to retrieve those. But given the fact that this has been a very messy

00:30process going through the shutdown, data collection has been interrupted. This is an interesting

00:35decision to just lump whatever they find from October into the November release, which we'll

00:41get in December. So that means that the FOMC, when it begins meeting on December 9th for the final

00:48meeting of the year, will not have this crucial piece of data, what happened in October to the

00:53labor market? What they do have is alternative sources of data. They'll also have a very

00:57delayed September jobs report that's coming out tomorrow. What kind of picture does that add up

01:02for them when it comes to labor? Well, they're just going to really need to discount the official

01:07statistics that they typically rely on. They typically look at non-farm payrolls. They apply some sort of a

01:13discount factor in their own head because they recognize that there are ongoing issues with

01:18measurement at the Bureau of Labor Statistics when it comes to non-farm payrolls. They're going to have to

01:22just sort of close their eyes and guess their best unemployment rate as they meet in December.

01:28But there is a broad swath of alternative data that the Fed is always looking at. We in Bloomberg

01:35Economics constructed our own alternative data-based labor market index that shows that right now,

01:41the labor market, broadly speaking, is about one standard deviation than it has been,

01:46one standard deviation weaker than it has been historically.

01:49Got it. And if the Fed is considering that same data set, and if the Fed is looking holistically

01:54at the labor market, it's going to at least give the Fed cover to cut rates,

01:59even if not every member is willing to make the decision to cut.