Deutsche Bank’s LaVorgna: Part-Time Hiring of Campaign Workers Lowered Jobless Rate

Monday, 08 Oct 2012 08:29 AM

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Politics were behind the sharp decrease in September’s unemployment rate, but don’t believe any of the conspiracy theories being thrown around, one economist says.

Presidential campaigns are hiring part-time workers in droves to drum up support for President Barack Obama and his GOP challenger, Mitt Romney, which sent the September unemployment rate falling to 7.8 percent from 8.1 percent in August, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

“[W]e have observed a large rise in part-time employment, which arguably hints of the sort of temporary, part-time hiring that is often associated with political campaigns,” LaVorgna wrote in a report.

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“In addition, we also observed a large +368k increase in employment of 20 to 24 year olds, arguably the demographic most likely to take part working on political campaigns. Indeed, we should note this was the second largest monthly increase in the history of this series.

The U.S. economy added a net 114,000 jobs in September, though the unemployment rate fell to a surprisingly low 7.8 percent as total employment rose by 873,000 in September following three months of little change, the Bureau of Labor Statistics said in its September jobs report.

“Over time, we expect the labor market to build upon its recent gains. However, the drop in the unemployment rate does not jibe with either the economy’s recent patch of middling growth or the fact that most of the gain in household employment was outside of private industry,” LaVorgna added.

“The fact that most of the gains were part-time and that a large portion of the increase was in the 20 to 24 year old demographic, arguably provides some anecdotal evidence that election year hiring may have artificially lowered the unemployment rate.”

The September jobs report sparked cries of conspiracy theories and accusations the Obama administration might have done something to fiddle with the data.

“Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers,” former General Electric boss Jack Welch said on his Twitter page, referring to Obama’s lackluster performance in the first presidential debate recently.

Welch later softened his take on the numbers.

“Perhaps the sharp improvement in the unemployment rate one month before the election was a total coincidence,” Welch told CNBC’s “The Kudlow Report,” adding “this is probably the most important election of my lifetime and it shouldn’t be decided by one number.”

Editor's Note: Obama Donor Banned This Video But You Can Watch it Here

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