Confusion at the Transcript

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The Bureau of Labor Statistics released its monthly employment survey results last Friday. According to the survey, the 180,000 new jobs created in March brought the nationwide unemployment rate down to 4.4 percent.

But this good news has been completely misinterpreted by local economic pundit George Chamberlin. Chamberlin, who serves as executive editor at the San Diego Daily Transcript, had this to say in his Friday column:

Most U.S. financial markets are closed today in observance of Good Friday. But, that didn't stop the Labor Department from issuing a strong report on the nation's job market. Payrolls in March rose by 180,000, well above expectations. And, January and February reports were revised to show a total increase of 32,000 jobs. Add all those jobs together and you can see why the unemployment rate dipped to 4.4 percent, the lowest since October. The last time the jobless rate was lower was in 2001. Sure doesn't sound like an employment report for a country that many people suggest is on the brink of a recession. [emphasis added]

Chamberlin is correct in noting that last time the unemployment rate was below 4.4 percent was in May 2001. What he fails to mention is that in May 2001, the nation was two months into a recession.

The fact is that the unemployment rate almost never rises substantially until after a recession has already begun. (See the excellent economagic.com chart generator for a visual). Low unemployment is good news, of course, and a low jobless rate does not by any means imply that a recession is near. But Chamberlin’s suggestion that low unemployment rules out an imminent recession is completely lacking in any factual basis.

Chamberlin managed to make a second misleading statement in the very same column, writing the following paragraph about the a new foreclosure website and the “so-called real estate bust:”

Could it be we are rapidly approaching the extreme in the so-called real estate bust? As reported in the Transcript yesterday, RealtyTrac is teaming up with Yahoo to create a foreclosure research center, whatever the heck that is. I guess if you lived in Georgia or Michigan where foreclosures are rampant, having a research center available would be a good thing. Sure, foreclosures here are higher than they've been in a few years, but still impact a fraction of all homeowners. [emphasis added]

I understand that there is some wiggle room about the definition of “a few.” But I’m pretty sure that the number fourteen falls outside the typically accepted range. In March 2007, more San Diegans entered the foreclosure process (as measured by notices of default adjusted for population growth) than they did during any month since March 1993.

So while it’s true that foreclosures impact “a fraction” of homeowners, it looks like that fraction is higher than it was throughout almost all of the 1990s housing bust. That’s without even considering the widely acknowledged increase in exotic mortgage resets that stands a good chance of accelerating the pace of foreclosures in the months ahead.

I sent Chamberlin an email message inquiring about these inconsistencies on Monday. I haven’t heard anything back.

-- RICH TOSCANO