October hiring rose dramatically during government shutdown

Vince Coglianese Editorial Director
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A surprising 204,000 nonfarm payroll jobs were created in the United States in October, despite the much-maligned government shutdown that consumed the nation’s attention during the first half of that month.

That number is nearly double the 120,000 that economists expected, making October one of the most productive months of 2013 in terms of job creation, flying in the face of predictions that the shutdown would devastate the struggling U.S. economy.

“There were no discernible impacts of the partial federal government shutdown on the estimates of employment,” the Bureau of Labor Statistics noted Friday.

Despite the optimistic hiring report, the unemployment rate rose slightly to 7.3%, but that “figure includes furloughed federal employees who were classified as unemployed,” the BLS report said.

The October jobs performance, which was relatively robust compared to the anemic job market that has prevailed since President Obama took office, surprised many Washington pundits. But it held to a well-established historic pattern in which government shutdowns have had no discernible negative impact on economic performance. (Related: US economy boomed during 1995/1996 shutdown)


The Obama administration has so far not addressed the new report. But in mid-October, Council of Economic Advisors Chairman Jason Furman predicted grisly October jobs numbers. “Weekly employment indicators…suggest that the labor market situation deteriorated in early October, coinciding with the shutdown and the threat of a possible default,” Furman prophesized in a statement.

“I mean whatever effect Obamacare might have on the economy is far less than even a few days of government shutdown,” Obama himself predicted in a speech in late September.

Republicans were eager to throw the new report, with its implicit refutation of shutdown hysteria, back at Obama.

“Right now the biggest roadblock to job creation is ObamaCare,” Republican National Committee (RNC) Chairman Reince Priebus said in a statement. “Republicans sounded the alarm on ObamaCare for years, but Democrats ignored those warnings. That’s why American families are now feeling the impact of the law—slashed paychecks, reduced hours, lost jobs, fewer job prospects, struggling small businesses, a weak economy.”

In a statement for the White House Friday, Furman again hammered the government shutdown, claiming, “There should be no debate that the shutdown and debt limit brinksmanship inflicted unnecessary damage on the economy in October.”

While Keynesian economics posits that government spending is necessary to prime the economy, in fact reductions in government spending have generally been followed by extended healthy economic performance — the most prominent examples being the renaissance of Eastern Europe after the fall of the Soviet Union, the U.S. economic revival of the 1990s after the so-called Peace Dividend, and the long-lasting structural boom of the 1940s and 1950s that followed the drawdown of World War II spending.

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