How to read jobs and inflation reports without the spin
The monthly BLS and CPI releases drive a week of political narrative each month. Here's what's actually in them — and what the spin gets wrong on both sides.
Once a month, the Bureau of Labor Statistics releases two reports — the Employment Situation (“the jobs report”) on the first Friday, and the Consumer Price Index (CPI, “inflation”) mid-month. Each triggers a week of political framing. Each is meaningfully more nuanced than the framing suggests.
Here’s what's actually in them.
The jobs report
What it measures
Two separate surveys:
1. Establishment survey — samples ~120,000 businesses. Produces the “non-farm payrolls” headline number (jobs added/lost). 2. Household survey — samples ~60,000 households. Produces the unemployment rate, labour force participation, and demographic breakdowns.
The two surveys often diverge. When they do, the divergence is the story — not the headline.
What to look at
- Non-farm payroll change (the headline): noisy month-to-month. Look at the 3-month moving average. - Unemployment rate: not directly comparable across decades because of methodology shifts. Useful for short-term trend. - Labour force participation rate: critically important. Falling LFPR + falling unemployment = people leaving the labour force, not a healthy job market. - Wage growth (average hourly earnings): compare to CPI for real wage growth. Nominal wages mean nothing alone. - U-6 underemployment: includes part-time workers who want full-time, and discouraged workers. Always higher than the U-3 headline rate. - Revisions to previous months: jobs reports get revised twice. Revisions are often larger than the new month's number.
What the spin gets wrong
- “X jobs added last month” without acknowledging the ±100,000 confidence interval - Citing the headline rate while ignoring labour force participation - Praising a low U-3 unemployment rate while U-6 underemployment is high - Treating revisions as “new data” rather than corrections to previous claims
The inflation report (CPI)
What it measures
Monthly change in the price of a representative basket of consumer goods. Two key versions:
1. Headline CPI — includes food and energy. Volatile. 2. Core CPI — excludes food and energy. Smoother. The Fed focuses on this.
What to look at
- Month-over-month change (annualised): the most recent reading - Year-over-year change: smoother, but lagging - Core CPI: smoother than headline; better gauge of underlying inflation - Shelter inflation: largest single component (~33% of CPI). Lags real-time housing markets by 6–12 months. - Services ex-shelter (“supercore”): what the Fed actually watches because it tracks wage-driven inflation - Real vs. nominal wage growth: average hourly earnings minus CPI
What the spin gets wrong
- Citing one month’s number as “the” inflation rate - Confusing headline and core CPI - Ignoring shelter lag (claiming inflation has “re-accelerated” when shelter is just catching up to known-stale data) - Treating CPI as if it captured *everyone’s* lived experience — different demographics have very different basket weights
How to actually read both reports
1. Open the original BLS release (bls.gov) 2. Read past the headline to the “Summary” section 3. Check revisions to the previous two months 4. For jobs, compute the 3-month moving average; for CPI, look at both core and headline 5. Compare to the Fed’s own forecasts (in the SEP, summary of economic projections) 6. Read at least one Left, one Center, and one Right framing — Prism's Economy topic does this in one screen.
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