@jack_welch Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers
Mr. Welch's 1.3 million followers on Twitter immediately began to comment, mostly negatively. The blogsphere quickly followed, with numerous commentators weighing in.
Most seemed to feel that it seemed highly unlikely that the BLS - mostly composed of career employees whose jobs will not be threatened regardless of who is the next President - would deliberately report false numbers to help President Obama.
Here, for example, is Reuters columnist Felix Salmon:
Does he have any evidence that the Chicago guys might be manipulating data? No. Does he think it’s even possible for the Chicago guys to be manipulating the data? Evidently, he does. What makes him say that? He won’t say. But is it a legitimate question to raise? In Welch’s eyes, absolutely, yes. If you’re Jack Welch, it seems, any time there’s US data which makes the government look good, the question can and probably should be raised: might the data be wrong? Or, might the government be manipulating it?
Eventually the tumult became so great that Welch announced on Monday that he would no longer write articles for either Fortune magazine or Reuters, largely due to their critical comments about his tweet.
In comments after his tweet last Friday, Mr. Welch indicated that his disbelief in the BLS report was largely based on his own personal recent experiences. He remains involved with a number of different companies, and all of them continue to struggle; ergo, the overall U.S. economy must be struggling.
Jack Welch made a career relying in many cases on his instincts; even his autobiography is titled "Jack: Straight from the Gut". It is not surprising, then, that he continues to believe that his instincts are often the best guide to what is really going on in the world around him.
I think that Mr. Welch is wrong, but like him I am relying on my "gut instincts". My belief that last week's improvement in unemployment is real, and not an election year gimmick, is largely based on the significant improvement in housing that seems to be occurring in many parts of the nation.
Housing is a crucial part of our economy. When new homes are built, or when existing homes are sold, our economy benefits. Homes have to be furnished, repaired, and maintained, all of which involve businesses that employ thousands of people.
When the housing boom turned into a bust in 2008, housing activity came to a screeching halt. Even now, when low mortgage rates have made home ownership more affordable than it has been for years, there still is a marked preference for renting versus buying.
But this is slowly changing, and as housing improves so too does the overall employment picture.
Last weekend I happened to watch an interview with Warren Buffett that appeared on the PBS program "Charlie Rose" in August 2011.
In the interview, Buffett noted that Berkshire Hathaway owns 70 different companies. At the time - again, this is 14 months ago - the companies that were either directly or indirectly associated with housing were the ones doing the poorest in Berkshire's portfolio.
When housing recovered, Mr. Buffett noted, he expected unemployment to plummet, since so many different parts of the economy are related to the housing industry.
He says in the interview that he expected that unemployment in the United States would be 7.3% by the time of the Presidential election (it was around 9% at the time). In the summer of 2011 this seemed wildly optimistic, but now seems at least plausible.
Housing is recovering, and this could be the reason that employment numbers are surprising on the upside. Even the mortgage lenders at my employer Boston Private Bank and Trust Company said in a meeting this morning that the housing market in the Greater Boston area is stronger than it has been for years.
Here's the full interview with Warren Buffett if you have a spare hour: