Just when you thought economic uncertainty may have been improving a bit, we get Friday's unemployment report for January. While the Bureau of Labor Statistics' two survey methods generally provide different numbers of jobs created, this time the difference was particularly huge. One estimate said just 36,000 jobs were created while the other showed 589,000. That latter estimate also caused the unemployment rate to dip by a huge 0.4% margin, all the way to 9.0%. First, how should one interpret such a strange result? Second, how should policymakers react?
Unfortunately, it's pretty impossible to make any strong assertions about what's happening in the labor market due to the differing signals in last month's report. If the economy grew by 36,000 jobs, then that shows disturbingly weak job growth, despite a fresh year and apparently increasing consumer demand as retail sales hit a new high in December. But if the U.S. saw 589,000 new jobs, then this would be a fantastic step forward in the beginning of the new year. If that rate of job growth persists throughout 2011, then unemployment would be whittled down to below 6% by year's end. That would surpass even the most optimistic economists' wildest dreams.