Thursday, July 01, 2010

Why Job Growth Might Be Better Than It Seems


"Whatever happens tomorrow, it’s worth keeping something in mind: The official government statistics are probably understating job growth right now.  That tends to be the pattern after recessions end. As the economy is starting to add jobs again, the Bureau of Labor Statistics understates job growth. And the opposite happens during recessions. Then, the government understates job losses."

~David Leonhardt in the NY Times Economix blog
 
MP: As the chart above shows, the BLS revisions to employment levels are generally positive during expansions (initial reports of job gains are later revised upward) and negative during recessions (initial reports are revised downward), and this pattern was consistent following the last two recessions.  In that case, employment gains could actually be better than what gets reported initially.   

11 Comments:

At 7/01/2010 4:22 PM, Blogger Chuck said...

Heh. Everybody hedge your bets and make your wishes, before the candles get blown out and the final call is made.

Here's hoping for good news, preparing for heartbreak. ;-)

 
At 7/01/2010 4:58 PM, Anonymous grant said...

MP:
You are having a big day here and i get the feeling you are saying i told you so.To all of us even the doubters.

 
At 7/01/2010 5:37 PM, Anonymous Lyle said...

For a lot of economic predictions we need to go to Delphi (it will help the greek economy out) get them to revive the oracle there have her breath the volcanic fumes and predict the futures. Since greece is a big part of the current issue it seems only fair to use a greek method to predict the future. (Also more human the Romans would have you sacrifice an animal and consult its entrails (Harspex)).
If you don't like this there are instructions on the web on how to read tea leaves. All of this is about as good as the output of the pundits or to modify Sargent Schultzes line they know nothing nothing!

 
At 7/01/2010 7:21 PM, Anonymous Anonymous said...

"David Leonhardt in the NY Times Economix blog."

Hmmmm, I remember when the NY Times was writing just this sort of thing in the aftermath of the Clinton recession. And, of course, they kept reminding us all that job creation under Bush was probably understated. Yeah, that's just how it was.

 
At 7/02/2010 8:25 AM, Blogger Junkyard_hawg1985 said...

The payroll employment numbers tend to get revised because of the birth/death model not being accurate. The household survey results don't get changed that much because they are the result of phone calls.

The June results are out, and the Household survey showed the economy LOST 301,000 jobs in June. This was on top of a loss of 25,000 jobs in May. This is a terrible report. We are still down 7.3 million jobs from the peak and heading the wrong direction. In the 1980-82 "W" recession, Unemployment dropped in 1980, then rose 10 months before resuming its drop. We only had 4 months of rising employment before it started dropping again.

 
At 7/02/2010 8:25 AM, Anonymous morganovich said...

so, june nonfarm payrolls dropped 125k today the worst number since last fall.

650k people abandoned job hunts and dropped out of u3, but are still in the currently more relevant u6. there are now 1.2mm "discouraged" workers up from 441k last year.

45% of unemployed have been so for over 27 weeks.

average workweek and wages were down (albeit very slightly).

the payroll numbers showed deteriorating growth in job creation and initial claims are up.

not sure i'd be breaking out the champagne just yet.

 
At 7/02/2010 8:32 AM, Blogger juandos said...

Since I question the New York Times' ability to accurately report what day of the week it is I'm also questioning why a Keynesian with a questionable view of history should be believed...

Meanwhile for what its worth we still see the following from the AP: Payrolls drop by 125K, jobless rate falls...

'A wave of census layoffs cut the nation's payrolls in June for the first time in six months, while private employers added a modest number of jobs. The unemployment rate fell to 9.5 percent, its lowest level in almost a year'...

 
At 7/02/2010 8:32 AM, Blogger Junkyard_hawg1985 said...

One other point to make. In June 2009, the unemployment rate was 9.5%, just as it is June 2010. There are almost 1 million fewer American working now than one year ago (139.882 million vs. 140.826 million). This is not a good sign.

 
At 7/02/2010 9:26 AM, Blogger Stonefoxcapital said...

seems to give more credence to following the Monster.com index. It doesn't seem to be as manipulated as the govt reports.

 
At 7/03/2010 8:04 AM, Blogger VangelV said...

The claim might be true when the recession ends but it likely isn't true today. Come to think of it, even after the recession ends the official manipulators will probably game the numbers to make things look better than they actually are rather than to reflect reality.

 
At 7/03/2010 4:04 PM, Blogger juandos said...

Well assuming that CNN/Money knows what its talking about, job growth doesn't appear to have a real bright future: 7.9 million jobs lost, many forever

Friday July 2, 2010

 

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