Expert Explains October's Flawed Jobs Report

Anthony Chan, JPMorgan's JPM Chase Private Client's chief economist, explained why the government shutdown messed up this month's job report on CNBC's Worldwide Exchange Friday morning.  "We're going to see conflicting evidence out there, because the way the government is going to handle the furloughed government employees is to consider them as unemployed in the household survey used to compute the unemployment rate," said Chan.  "For that reason I think the unemployment rate could go as high as 7.5 percent." Chan did note that if you look at the more popular non-farm payroll form the establishment survey, the same government employees wrapped up into the unemployment rate are actually counted as employed if they were paid during the period. He said this makes analyzing the numbers confusing.  Related: #PreMarket Primer: Friday, November 8: Investors Tweet A Sigh Of Relief Chan is expecting a significant decline in the unemployment rate next month, as these employees are back to work, including that contractors who lost work during the government shutdown will also be back in the mix again.  According to Chan, the additional momentum of the economy will push for faster growth in 2014, and the unemployment rate will continue to drop. He cited that this momentum has caused concern with some that the Fed will taper prematurely.  Jason Cunningham had no position with the mentioned entities while writing this article. Visit Jason on Twitter at @JasonCunningham and @Benzinga.