WASHINGTON (Reuters) - Private economists have gone overboard in attributing some of the job market’s recent strength to good weather and quirks in government data, a senior White House economist said on Tuesday.
Wall Street analysts have pointed to a mild winter in the United States and potential seasonal adjustment problems in the data as playing a significant role in driving down the unemployment rate since last summer.
But Alan Krueger, the chairman of the White House Council of Economic Advisers, said there was more evidence that a broad-based economic recovery was taking hold.
He noted that parts of the country that are normally less affected by cold weather saw similar drops in the unemployment rate as did the nation as a whole. The unemployment rate fell to 8.3 percent in February from 9.1 percent in August.
“Some economists have been too quick to dismiss recent job growth as a statistical fluke,” Krueger told a gathering of the National Association for Business Economics.
Economists at JPMorgan and other Wall Street banks have suggested the unemployment rate has fallen in part because the darkest days of the 2007-2009 recession may have skewed models used to adjust government data for seasonal shifts in employment.
Krueger disputed their findings, however, saying the recent drop in unemployment would have been even more stark using seasonal adjustment patterns from before the recession.
“I am skeptical that seasonal factors are skewing our key statistics in a major way,” he said.
The Council of Economic Advisers expects the economy will create some two million jobs in 2012, which would be the most in six years, and Krueger said recent data provides support for the economic outlook.
The housing industry and small businesses are showing signs that will lend a hand to the economic recovery this year, he said. That is important because those two areas of the economy were hit especially hard by the financial crisis that accompanied the recession.
Some private sector economists are less optimistic, especially with regard to housing. Data on Monday showed contracts to purchase previously owned U.S. homes unexpectedly fell in February, suggesting a loss of momentum in that market after recent signs of improvement.
But Krueger, a senior advisor to President Barack Obama ahead of the leader’s November reelection bid, is nonetheless hopeful.
“The recovery appears to be durable,” he said. “Some lagging sectors (are) reaching bottom and beginning to turn around.”
Reporting by Jason Lange; Editing by James Dalgleish