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October 20, 2014

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MEMO FROM CARSON CITY:

Art of the spin, unemployment-rate style

Tiny drop gets response from pols, but experts say it’s nothing to cheer

No sooner were the latest unemployment numbers released Friday morning than politicians offered their takes, illustrating that no fact will go un-spun this campaign season.

Senate Majority Leader Harry Reid in a statement declared the drop in statewide unemployment from 13.3 percent to 13 percent a “positive development and further evidence that Nevada is starting down the economic road to recovery.”

Rep. Dina Titus called it a “positive sign that we are beginning to pull ourselves out.”

Gov. Jim Gibbons, however, had a different, more somber, take.

In a release headlined, “Drop in Unemployment Rate Expected to be Temporary,” the Republican governor said, “I would like to tell the citizens of Nevada we have seen the worst of the economic crisis and are seeing the fruits of recovery. The decline in unemployment has not been followed by an increase in the employment base.”

Two very different views of a single set of numbers. For Democrats, the Nevada economy is rebounding. For Republicans, no matter the overall number, the underlying data still say things are bad.

Here’s a statement that will shock no one: Politicians will try to spin the news for their own gain between now and November 2010. And the spin will be most contested in the economic arena.

Put broadly, Democrats will try to burnish any good economic news to show that the party at the national helm has things under control. Republicans, on the other hand, have a political incentive to argue that Democratic policies have failed, and therefore the economy is getting worse.

Are Republicans rooting for a bad economy, as some accused Democrats of cheering for the military to founder in Iraq when President George W. Bush was in office?

We have not reached that level of cynicism yet. But it’s important to note that the roles of boosters and pessimists reversed with the change in administration.

In the case of Nevada’s economy, when the spin stops, state and private economists generally agree with Gibbons’ view.

Because of its cause, the dip in unemployment should not be celebrated. The rate dropped because fewer people were looking for work, with others giving up in frustration or leaving the state. The number of jobs actually decreased from September to October.

“It may be a bit premature to break out the champagne and party hats,” said John Restrepo, principal at the financial analysis firm Restrepo Consulting Group and a member of the state’s Economic Forum. “Total employment still decreased by 5,600 between September and October.”

Jeremy Aguero, principal of the financial firm Applied Analysis, said the “condition is effectively unchanged between September and October.” A muted response was appropriate, he said.

“The unemployment drop isn’t because we’ve created jobs,” he said. “The principal reason is that 21,000 people stopped looking for work.”

Bill Anderson, chief economist of the state Department of Employment, Training and Rehabilitation, wrote a synopsis to accompany the numbers released Friday. He called the unemployment drop “welcome news; however it is not a reason to be overly optimistic.”

He continued: “We expect the unemployment rate to continue to climb over time, but we are seeing some signs of stabilization.”

So how should the public read the unemployment numbers?

Restrepo says the figures matter but must be looked at over several months to see larger trends.

“One month does not a trend make,” he said.

Aguero suggested the public take note of two numbers in determining where the state is headed — job growth and average hours worked per employee. “Businesses will give more hours back before they hire additional workers,” Aguero said.

The average weekly hours worked per employee has dropped from a high of 38 to 35.5.

Unless you want to argue that less time working means more quality time with the family, it’s tough to spin those numbers.

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