The Most Important Number of the Week Is 266,000
The April rise in U.S. jobs was nowhere near what economists expected, but it’s hardly a disaster.
The latest labor report badly missed estimates, but it would be considered a strong result at any other time.
Photographer: Spencer Platt/Getty Images
When the latest U.S. jobs figures were released Friday morning, they were too shocking to believe. Something had to be wrong. The economy couldn’t have generated only 266,000 jobs in April when the median estimate was for a gain of 1 million. The size of the miss was about four standard deviations away from the norm, meaning the odds of it happening were a microscopic 0.1%.
This was surely a disaster of epic proportions, right? Wrong. All the report showed is that the economy is in uncharted waters and analysts are having a hard time adapting old models to the new order. It was always going to be a tall order to try predict how the economy would respond to trillions of dollars of fiscal support along with the trillions of dollars pumped into the financial system by the Federal Reserve during a serious pandemic. That scenario isn’t in the textbooks.