While I did my best to avoid the news, I did pass CNN now and then when I was flipping channels, chuckling at the usual negative reactions to relatively positive news. GDP growth for the first quarter was revised down to 3.9%. Since that’s 0.9% higher than average, it should have been good news, now that the data are final. But of course it wasn’t, according to the talking heads.

The unemployment rate remained steady at 5.6%, well in line with averages, and much better than other recent periods. Only, and I say only, 112,000 new jobs were created in May, and previous months were revised downward slightly. Already forgotten was the fact that that those months had been revised upward from their initial estimates, and those were very robust months where the final revisions were not really meaningful.

Of course, and not noted, was that the employment data were stunning compared to last June. The report of June 2003 saw a loss of 30,000 jobs in the payroll survey, a loss of 114,000 jobs in the household survey, and the unemployment rate was 6.4%. Just as a reminder, there were some economic textbooks in the late 1970s and early 1980s that speculated that full employment, the best employment there could ever be, was between a 6% and 8% unemployment rate. So to a late 1970s economist, 6.4% would have evoked great fears of a too-hot economy! In June 2004, the household survey showed an increase of 137,000 jobs, 25,000 more than the payroll report. Yet again, households still tell a different story than big company payrolls.