Welch Elaborates on His Attack on U.S. Unemployment Data

Oct. 10 (Bloomberg) -- Mort Zuckerman, chairman of Boston Properties Inc., talks about U.S. unemployment and the presidential election. Zuckerman speaks with Alix Steel on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Jack Welch, the former chief executive officer of General Electric Co. (GE) who ignited a controversy by suggesting the Obama administration altered the U.S. unemployment rate for political gain, said the jobs calculation was flawed and contradicted by other evidence.

“The coming election is too important to be decided on a number,” Welch wrote in a column published yesterday on the Wall Street Journal’s website. “Especially when that number seems so wrong.”

The U.S. Bureau of Labor Statistics reported on Oct. 5 that unemployment fell to 7.8 percent in September from 8.1 percent the previous month, giving President Barack Obama’s re-election campaign a boost a month before the election.

Welch, 76, in a Twitter message immediately after the report, suggested the numbers were phony. “Unbelievable jobs numbers. . . these Chicago guys will do anything. . . can’t debate so change numbers,” he wrote. Obama administration officials denounced Welch’s claims as baseless.

In his Wall Street Journal column, Welch modified his criticism. “If I could write that tweet again, I would have added a few question marks at the end,” he said, “to make it clear I was raising a question.” Still, he said, the dip in unemployment is “downright implausible.”

He also said he isn’t working for Republican presidential nominee Mitt Romney’s campaign. Welch has contributed the $5,000 maximum to Romney’s bid, describing the former Massachusetts governor on CNBC as “the most qualified leader” to seek the White House in his lifetime.

Other Evidence

The column was published by the Wall Street Journal after Welch ended his agreement to write for Thomson Reuters Corp. (TRI) and Fortune magazine.

Welch sent an e-mail to Reuters Editor-in-Chief Steve Adler and Fortune Managing Editor Andy Serwer saying he and his wife, Suzy, were terminating their contract. The print title had agreed to pick up the column. A Reuters spokeswoman, Barb Burg, confirmed Welch was leaving.

Welch’s departure followed criticism by Serwer of Welch’s Oct. 5 comments and a Reuters article quoting a money manager who described Welch’s statements as laughable, Fortune said in a posting on its website yesterday.

Some Romney supporters picked up on Welch’s charge that Obama’s Chicago-based campaign doctored the Bureau of Labor Statistics’ report for an edge in the presidential race.

‘Bottom Line’

In his column, Welch said that other evidence, including his personal sampling of opinion, point to a weak recovery which wouldn’t support a sharp drop in the unemployment rate.

“I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8 percent from 8.3 percent over the course of two months,” Welch wrote. “Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is -- well, let’s just say, overstated.”

Economists in both political camps dismissed the idea that government bureaucrats would, or even could, manipulate the data.

Alan Krueger, chairman of the White House Council of Economic Advisers, told Bloomberg Television on Oct. 5 that Welch’s remark was “irresponsible.”

The people who compile the numbers “are professionals” and “do this as a career,” said Doug Holtz-Eakin, economist for the Council of Economic Advisers under President George W. Bush. “I have a lot of respect for them.”

Each month, federal agencies, staffed by career civil servants, compile the raw data that eventually become two jobs- day numbers: the unemployment rate and the total number of jobs added to the economy.

To contact the reporter on this story: Jim Rubin in Washington at jimrubin@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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