[O'brien:] Welcome back, everybody. You're watching our special coverage. We're just about six minutes away from that highly anticipated October employment report. It's the final jobs report before Tuesday's election, just four days from now, and it would definitely have an impact on both President Obama and Mitt Romney's campaigns. I want to welcome Ken Rogoff to our panel. He's joining us live from Boston. He's a Harvard University professor of economics and public policy. We're going to begin, though, and welcome, sir. We're going to begin, though, with Christine Romans. Christine, let's talk a little bit about how they crunch these numbers.
[Romans:] OK, Soledad. So, the jobs report is actually two separate surveys. The unemployment rate comes from a survey of 60,000 households. The job creation number comes from a survey of 141,000 businesses. Now, to get the unemployment rate, 2,200 census workers interview 60,000 households in person and over the phone. Everyone over the age of 16 is classified as employed, unemployed, or not in the labor force. From that, then the government extrapolates the unemployment rate. Now, the job creation number comes from another sample. It's the sample of 141,000 businesses. They tell the government how many workers they have on their payroll. Now, like the household survey, the sample is meant to reflect the whole U.S. It includes factories, offices, stores, and various government entities like teachers. Now, both surveys look at a particular week or pay period usually around the 12th day of the month. So, this month, this month, it was the week of October 7th to the October 13th. Households were contacted the following week to find out if they were working or looking for a job from that week of the 7th to the 13th. Now, businesses submitted payroll information for roughly the same period. Soledad, once all of these numbers are in, the labor department and its statisticians and economists boil them down and gives them to the President's council of economic advisers the day before they are released. I'm on the call right now, and in just about four or five minutes, we're going to get the number from the labor department. So, I'm going to listen now. And when I've got it, I'll let you know.
[O'brien:] All right. You go to the call. I'm going to turn to Erin now. Let's talk a little about analysis on this. We all talk talk about this number and that line, the 8.0 percent.
[Burnett:] Right.
[O'brien:] Why is that line so critical?
[Burnett:] It's more of a psychological line than anything else. It's also interesting, as Christine points out, the two different surveys. People tend to pay attention to the unemployment rate, because it makes sense it's always the headline number, but the number that is seemed, you know, sort of by investors, economist is the most accurate reflection of what's really happening is that payroll number, what businesses report. And that, of course, has been anemic for a long time. Although, last month, you know, even though it was anemic, despite that big drop in the unemployment rate, we did see some upward revisions from prior months. So, it does seem that things are getting better, but as you said, I think accurately, sluggish more of that's still the way to describe the labor market. But it is that payroll number to watch.
[O'brien:] What do you think could make the marker less sluggish and less morbid?
[Bair:] I think uncertainty is really weighing on the market right now, uncertainty with the fiscal cliff, regulatory uncertainty. I don't think it's so much the debate isn't, you know, whether you should regulate or not regulate, whether you should have a fiscal responsibility plan or not. I think that, really, the biggest issue is make some decisions, let us know what the future is going to look like. And you know, what is healthcare going to look like? What are payroll taxes going to be? What is the corporate code going to look like? Do we have a long-term plan to get these budget deficits under control? We have very resilient economy. If people just know what the rules are and what the game plan is, they can follow it and react to it. But now, there's a huge amount of uncertainty.
[O'brien:] I'm going to ask you to join us. Do you think that uncertainty, as Sheila is saying, is playing a huge role in all of this? By the way, for everybody, I might interrupt you when these numbers come out. So, carry on. But I'll jump in when the numbers come in to Christine. Go ahead, sir.
[Ken Rogoff, Professor Of Economics & Public Policy, Harvard University:] I think the uncertainty is huge. And you see it in business investment which is very weak. You're sitting there. There's about to be an election, which could mark a huge shift in policy. You don't know which way it's going to go. You're going to wait before you do a big investment, big hiring. And as Sheila said, there are all these uncertainties about how health care is going to be resolved, the fiscal cliff, a lot of uncertainties holding back the economy at the moment. Hopefully, some of it will get resolved soon.
[O'brien:] I'll be asking the question of Grover Norquist, because I'm going to read a quote, Grover, of you to everybody. And you said this, "We have to dramatically reduce the cost of defense whether there's a sequester or not. Maybe the sequester focuses their attention. And to the extent that it does, that's a healthful thing." And I think some people would say, you know, this leads us all to the fiscal cliff and we're playing that game of chicken basically on the highway. Don't you think?
[Norquist:] Well, I think it's important that we reduce government spending across the board, and conservatives need to look at defense spending in the same way we look at other kinds of spending and if it's wasteful, let's do less of it. So, it's very important. We've had an explosion of spending under Obama. Bush spent too much money, but Obama did it on steroids. You know, a trillion dollars of stimulus spending, $5 trillion of debt. He's bankrupting the country. We're talking about these numbers on unemployment, but the damage the long term, permanent damage done to America by Obama's spending spree and the regulatory when you say there's uncertainty, there's a lot of uncertainty, because there are thousands and thousands of pages of regulations that this administration is not putting out before the election because it's going to be so devastating the economy. They don't want people to see it yet. damage from Obamacare doesn't kick in for another year.
[O'brien:] So, let's bring in John Berman.
[Berman:] I just want to talk a little bit about the time when we talk about how this is four days before the election, but it also comes after a very interesting week politically, one in which a lot of people think that President Obama may have stemmed whatever momentum Mitt Romney had. And President Obama may be going into this week, with the hurricane, the way he handled it, and swing state polling which frankly shows him consistently in the lead in most of the important states. A lot of people think President Obama has the wind at his back going into this weekend. This jobs report may be the last opportunity for Mitt Romney to change the momentum yet once again. We've already seen it changed so many times
[O'brien:] Let's go to Candy Crowley, because Candy, of course, when you look at polls, it's Mitt Romney who gets the advantage, when people are asked about what's the thing you care about the most and who would do the better job, it's economy and Mitt Romney.
[Crowley:] It is, but when you ask folks that other question that pollsters always look at, who understands the life or the needs of people like you, President Obama always scores higher on that. So, there's kind of this macro picture. People look at Mitt Romney and they say, oh, I think actually he'd be better fixing the economy as a whole. But then, when you ask them who understands you, who understand what's going on in your life, they say President Obama. So, I think that there is obviously, there's some conflict there. But closer to home you get, I think as a candidate, the better your chance. Now, I can also tell you that the Romney campaign is looking at his own numbers, all the numbers we see, and they still see a clear path, they say, to victory as do both sides. But it's one of those things where, as we all know, it comes down to who's got the biggest who's got the best turnout model in which states. And, that's just something that's not really knowable until Tuesday evening.
[O'brien:] It always comes down to that, right? The poll that really matters is the poll that happens on Tuesday evening. Candy, thank you. Let's get to Ali Velshi. I have to warn you, I may be cutting you off in two seconds. We're waiting to Ali, wait a minute.
[Velshi:] We've got the number right now. It's 7.9 percent.
[Romans:] It's 7.9 percent, 171,000 jobs created, 171,000 jobs created, 7.9 percent is the unemployment rate. So the jobs the jobless rate is exactly as they expected, but the job creation was a little bit better. There are some revisions in these numbers, we're told, from the our producer at the labor department. Revisions in this number that are actually good. So I'm going to toss it back to you with some more details. But this is a number that is exactly in line on the unemployment rate but better in the job creation. As Ali has pointed out, that job creation number is a number that a lot of people really watch because that's from businesses, what businesses say they're doing.
[O'brien:] How do people understand that in some ways? Erin, we'll start with you. You've had eight seconds to analyze these numbers.
[Burnett:] Right. There's a lot of numbers in here you want to look at, earnings and things like that. The 7.9 percent, that's fine. The 171,000 I'll highlight. That's a good number relative to what we've seen in recent months. I don't have the numbers in front of me. It's above the rate you need to actually keep up with population growth and people entering the workforce. We're in a big hole, so we're not anywhere near that. That's a solid number, 171, would be my initial take without the background data.
[O'brien:] Grover Norquist, Erin says solid number. What do you think?
[Norquist:] Well, 7.9 percent unemployment, these are all lousy numbers. When you add in the fact that a lot of people aren't in the workforce, as we've been discussing, two percent of the population has left the workforce. That's why the unemployment numbers aren't at over 10 percent, which is the real unemployment number of over 10 percent of people who want to work and aren't working. This has been a real problem. And it's not only that the economy is weak and had four years of a very poor economy, even the recovery part of Obama's administration has been weaker than any recovery since the 1930s. We spent $5 trillion to get a lousy economy.
[O'brien:] Let me interrupt you for a second. Sheila Bair, do you think he has a point, $5 trillion for a lousy economy or do you say, people will look at that 171,000 and that is in some ways this is about a narrative out of this report?
[Bair:] Right, 171,000 is a good number. We've been averaging 150,000. That is a very good number. The 7.9 percent is probably a slight negative for Mr. Obama because it doesn't suggest continued improvement. That number has a lot of faults, as we'll discuss. And you have to point out the job quality again. But the 171 itself is a good number.
[O'brien:] Robert Gibbs, Mr. Rogoff, called Mr. Norquist Mr. Doom and Gloom would you say he is doom and gloom or a realist that is taking a very clear look at the dire straits of the economy without and how he sees it?
[Rogoff:] There's a forward looking and backward looking component. I think in the backward looking component, I think that when you have a decent cries like this you cannot compare it to 1982. You cannot compare this to Ronald Reagan. You have to look at really deep, systemic financial crisis around the world that the U.S. has had. And then the recovery is still tepid, but not compared to those. It's a little better than average, frankly. It's much better than a lot of countries have been doing since 2007, and it's better than earlier United States recoveries when you look at things unemployment when we've had deep banking crises. That said, nobody is happy with this, and we would like to have a path to faster growth going forward.
[O'brien:] Ken Rogoff. Let's get right to Ali Velshi. I want to ask you a question. Under the establishment survey data, we start break out the actual jobs, nonfarm payment, health care, retail, leisure and hospitality. What is the one you look at most closely?
[Velshi:] In terms at looking at a recovery, and particularly because I'm in Ohio, I'm always interested in the manufacturing numbers. One of the disadvantages of the way out economy is going is we tend to see more in business services and professional work because we're not manufacturing as much. Manufacturing is important. The other thing you want to lock at is health care. It's been a growing area for the entire recession. We've gained health care jobs. Those are key. The other thing we want to look at, Soledad, revisions to August and September. They are much better. Sheila just said over 150 is better. It's not great. It's better. August we thought we gained 142,000 jobs. It's now been revised up to 184,000 jobs. September, we thought we gained 114. It's not a great number. It's now been revised upward to 148,000 jobs.
[O'brien:] Ali, let me stop you for a second. Tell me if I'm wrong for August it was revised from 142,000 to 192,000 non Yes, 192, you're right. You are right. I misread that, to 192. So these are now in the vicinity of strong. Both President Obama and Mitt Romney have talked about 12 million jobs in four years. That would be 3 million a year, 250,000 a month. Now we're edging up to 200,000 in August. We're now getting into the vicinity of real job creation that could actually have an effect on people. And that's what's important here. As you know, I have real problems with the unemployment number being bandied around as a political football, because it's hard to understand. It is actually a moving target. Grover gets stuck on it, but the fact is that this job creation number and wages earned and the type of jobs are all more important, and this is actually quite positive. I don't mean that politically. I mean this is good for America. Let's talk about what you raised. I want to bring in Candy Crowley for this. You know, Ali, Candy, said that manufacturing is what he wants to look at. When I read what they say about manufacturing, manufacturing employment changed little in October. On net, manufacturing employment has shown little change since April. So that has to be a little black cloud in what I think some people are saying are good, decent numbers.
[Crowley:] Well, it is, and especially since the President has always focused on manufacturing, talking about bringing manufacturing jobs back, because, of course, that rings to the good old days. You could have a great middle class life inside manufacturing plants. And that way of living has for decades kind of gone away. However, I think what you're that does take away from one of the President's talking points when you talks about, and we've added good manufacturing jobs. They still have added some, just not since April is what I think you just said. But I think what you have here politically is more fuel for the same fire. I think the President has said we're headed in the right direction but it's not enough. He has been saying that for four years. You'll hear Mitt Romney say they've spent a whole lot of money and we don't have much to show for it. This is a weak recovery. We don't want to stay on this slow road to recovery. I can do this better. He has been saying that for a year and a half. So I think we just have both sides saying yes, here is our latest report and it proves exactly what I was just saying.
[O'brien:] Interesting. Let's go back to Christine Romans. Christine, I want to flag something in this report on the front page, saying that the unemployment for blacks increased to 14.3 percent.
[Romans:] It did. And most of the worker groups were unchanged or fell a little bit unchanged rather. The jobless rate for blacks is 14.3 percent, for adult men, 7.3 percent, for women 7.2 percent, for teenagers almost 24 percent. We've been watching these worker groups. And as you know, for Black American workers, for black Americans the unemployment rate has been about double, even in good times. So there's a structural problem there that many poem have said the recession and recovery since the recession have only made worse. So that's something we're closely watching. Also we'll be looking at factory jobs, a ladder to the middle class, jobs that have been gutted really in the past 20 years, that's something that is a very big not month to month. This is a longer term, multi-president kind of issue that has to be tackled. And the recession, quite frankly, set us back on that. In terms of where we were seeing the job growth, professional and business services tend to be higher paid jobs. Computer systems designers and engineers, those tend to be very god jobs, growth there. Different kinds of technology, information technology, and also retail trade and leisure and hospitality, those are lower-paying jobs. Those tend not to be jobs that you can send a kid to college on. Often they tend to be part-time jobs as well. So, manufacturing incredibly important, Ali is right, especially in those swing states. Health care jobs that have been growing, it's these knowledge jobs that have been growing, there's good demand for. We talk about these numbers, too. When you talk to CEOs, Soledad, the thing they say is we can't find workers with the right skills for our jobs. Politically, we're talking about we need more jobs. But CEOs say we don't have the right workers. We have the jobs, not the right workers. That becomes an education story.
[Berman:] The numbers we've been talking about, the most politically charged numbers here, the labor force participation rate, which rose 578,000 in October and the labor force participation rate edged up to 63.8 percent. So there is movement in that number that you were talking about before. How much is that really?
[Romans:] So that is the number that Grover Norquist has been talking about. We're talking consumer confidence that was strong this week, guys. People are looking at their 401 [k] s. They're a little bit better. Revisions Ali was talking about the last several months. They're hearing all of this and some discouraged workers are saying I'm going to try again. They're going to try to get a job.
[O'brien:] Erin Burnett, when you look at this, everybody at the table is furiously taking notes on their report. What do you look to flag?
[Burnett:] Ali and Christine have pointed out some of it, and John. There are some good things when you look at a participation rate. Obviously still low. You see in row tail and other areas hiring. Long term unemployed, little change. These are people that have not had a job for 27 weeks or more. So you're not seeing a change there yet. Other two things we look at are people working longer weeks. That generally means you'll hire more people. Workweek is unchanged. And in terms of hourly earnings, when we look at income growth that has lagged so significantly over the past decade or more and you saw that edge down a little bit. There are definitely good things in here. I think the headline, no question, is good. Upper revisions for the past two months when you add those together, revisions from 142 to 192, 114 to 148, and 171 that's very good. Overall take will be very good. When you're saying is it really getting stronger, will people start to earn more, will we see an uptick, you're quite seeing that pressure yet.
[O'brien:] Ken Rogoff, as Erin just said, 142 to 192, an August revision. September revised upward from 114,000 to 148,000. Is this a number that people like yourself or economists crunch and say this is interesting or does it really have an impact on those of us who are not crunching these very numbers and looking back to past months for their statement of employment figures?
[Rogoff:] Well, these numbers are so rough, and there's so much uncertainty around them that they do keep getting revised. And we do tend to look at the last few months, not just the current number, what the overall revisions, and overall picture is more positive than it was. Let's be clear, this is still a tepid recovery. This is a good, modest, good report in the context of still this very slow recovery. It doesn't change the overall picture. I think politically, you know, it's probably slightly better for President Obama, obviously, than if it had gone over eight percent, the unemployment rate, or we had seen a big drop in jobs. From an economic point of view, it's modest improvement. But it's not the kind of growth we need to get 12 million jobs over the next four years like both candidates are promising. So it isn't a game changer, not a disaster.
[O'brien:] All right, so back to Candy Crowley, I'm sure everyone is spinning this, trying to figure out the headline that they write. Who I hate to talk about winning when you're talking about people's jobs and people's lives, but in terms of how it's spun, it will be a win and a lose. Who do you think gets the momentum out of this?
[Crowley:] You know, I hate to put a damper on this, but we are at a point where I think you look at the undecideds we're not talking about nationwide undecideds. We're really talking about undecideds inside these swing states. It's such a miniscule number.
[O'brien:] Meaning what? How many?
[Crowley:] It depends on the state. It depends on like two percent, three percent, four percent, around in there. And you get to a point on the weekend before an election where you begin to know that many of those undecideds are really the disgusted, and they may not show up on Tuesday. You're going to see a portion of undecideds not show up. Do people go into the voting booth still not knowing who they're going to vote for? I have talked to people who say that's exactly how they are. So insofar as this shifts them, I would assume that 171,000 sounds like the strongest I've heard in a while in terms of creating new jobs. And you can still see it's a slow recovery. So I thought these numbers and the people's feel for the economy have been baked into their choice for a long time. But if it's going to be an advantage, I'm assuming that it may be a slight advantage for President Obama. But I honestly am not sure that this is going to move those figures in a way that we're going to notice.
[O'brien:] We've got to take a short break. Ahead on STARTING POINT we're going to talk a little bit more about the 7.9 percent unemployment figure, 171,000 jobs created in the month of October. And we'll talk about the ripple effects on the presidential race, on financial markets, on the overall recovery, all that and much more. We're back in just a moment. Stay with us.