If it sounds too good to be true, it probably is, right? Let's hope that's not the case with new unemployment numbers released Monday by Gallup, which show a steep drop in the jobless rate midway through October.
Despite the escalating euro zone sovereign debt crisis and general economic malaise, Gallup reported a national unemployment rate of 8.3 percent this month, down from 9.2 percent in September. Furthermore, underemployment—a measure of workers who are employed, but not in the capacity they want to be—fell sharply as well from 18.5 percent in September to 17.5 percent in October.
But the impending, sales-heavy, holiday season might explain some of the uptick in employment because Gallup's rate is not seasonally adjusted. Halloween has become the third-largest sales season for many retailers, according to Gallup, which has likely spurred hiring activity. In addition, many stores have begun staffing seasonal employees for the Thanksgiving and Christmas holiday shopping seasons.
Nevertheless, while the reported figures might be skewed to some extent by seasonal hiring—even the pollster admits the counterintuitive nature of the sharp improvement could be an "aberration that will dissipate"—Gallup's findings may also be an early indication of a nascent improvement in the labor market: "The drop suggests the government could report an October unemployment rate of less than 9.0 percent," the Gallup report said. "This job market improvement appears real—and, in turn, that implies the Main Street economy may be somewhat stronger than Wall Street generally perceives."
The extent to which Gallup's encouraging measure of unemployment is confirmed in government readings will remain unclear until early November when the Bureau of Labor Statistics releases its official employment report. Although Gallup's midmonth report covers the same period the government uses for its report, it leads the government's seasonally-adjusted report by several weeks and differs in its survey methods. Whereas Gallup uses data from a random sample of telephone interviews, the bureau uses a combination of data collected by the U.S. Census Bureau and a sample of payroll records. If the numbers confirm the downward trend in unemployment as reported by Gallup, the positive data could buoy consumer confidence and spur more spending, an activity that has been conspicuously absent as Americans have pared down budgets and opted to pay down debt rather than spend. The United States may have narrowly sidestepped another recession, but with recent lackluster economic projections, more consumer spending could be the missing ingredient in the recipe for real recovery.