The unemployment rate in the US probably stuck at 4.3% last month, but it “wants” to tick up. Or round up.
That’s according to the final estimate for September using the Chicago Fed’s suite of labor market indicators.
If you’ve never heard of those indicators that’s because i) they’re new, and ii) you wouldn’t have needed them to determine the unemployment rate if the federal government were open to publish the UNR.
The federal government isn’t open, though — a sad AP article published Thursday showed a Park ranger taking down the American flag at the Fort Sumter National Monument center in Charleston — so you need to avail yourself of any and all supplementary data to get a sense of the employment landscape if you intend to trade the macro trajectory during the shutdown.
The Chicago Fed debuted its labor market indicators just a couple of weeks ago which, as it turns out, was not a moment too soon. Methodologically speaking, they roll up numbers from the CPS “with high-frequency labor market data and other more traditional survey measures” in an effort to “construct real-time estimates that summarize the flows of workers into employment and out of employment.” Those flows are then “translated” into a projection of the civilian unemployment rate.
The figure above shows you probabilities for possible values of the U-3 rate, as predicted by the Chicago Fed’s new model, and published Thursday morning.
Unrounded, the final projection for September (the model’s updated twice per month) was 4.34%, up 0.02% from the actual UNR for August as reported by the BLS. The distribution suggests the bias was higher.
If your question is what we’re all supposed to do with that, the answer is, “How the f-ck should I know?” Who am I, Austan Goolsbee? No, I’m not. But Austan Goolsbee is Austan Goolsbee (his alien-esque visage notwithstanding), and he offered some guidance in that regard.
“[T]he best number is the BLS number, but if we don’t have that, we’re going to use the Chicago Fed numbers and other numbers,” he told Kai Ryssdal, during an interview with American Public Media’s Marketplace. “Perfect timing, actually, for you guys to be rolling this thing out,” Ryssdal chirped.
Later in his chat with Ryssdal, Goolsbee lamented the government data blackout. “We [have] some cross currents and [we’re] going into a period where you’re trying to figure out, ‘Is this a transition?’,” he said. “[If] you’re not going to get the data, [it’s] just that much harder.”
