Shwing!

I predicted +167,000 private sector employment, +134,000 overall because of a drop in government workers. Actual numbers: +159,000 private sector, +151,000 overall because of basically flat government employment. I declare victory!

Most forecasts were much more pessimistic. Calculated Risk says the consensus was +60,000. In fact, the establishment survey side of the BLS employment report was stronger than the headline number indicates because they revised August's and September's numbers upward by 56,000 and 54,000 respectively. The BLS now estimates that 1.1 million jobs have been created since December 2009. This is not sufficient - a good number would be closer to 3 million - but it is a far cry from the "jobless recovery" following the 2001 recession.

Another good piece of news is average weekly hours, up from 34.2 to 34.3 hours. Pre-recession average was around 34.6. As we approach 34.6, more and more of the increased labor demand will show up as an increase in jobs rather than hours, and the jobs numbers will look better and better.

On the other hand, the household survey indicates a loss in employment of 330,000 workers, most of whom left the labor force (labor force fell by 254,000). This number is very volatile however so you don't want to make too much of one month's data. Since December 1.3 million more people are working according to this measure.

What does all this mean for policy in the months to come? Briefly: we still need QE2. The positive news does not mean that it is now time to contract fiscal policy - we need to extend the middle class portion of the Bush tax cuts, we need more aid to state and local governments, we need extended unemployment insurance. Republicans will nip this recovery in the bud if they insist on slashing the deficit or shutting down the government.