Post by unlawflcombatnt on Oct 9, 2007 2:11:18 GMT -6
More on the overstated jobs number, from Floyd Norris's blog at the New York Times:
Assuming Jobs
10/5/07
"The employment report is being hailed as good news, proof that the economy is stronger than it appeared after last month’s bad report.
Well, maybe.
As reported, the last 6 months have seen an average job gain of 112,000 — the lowest such figure for any 6-month period in 3 1/2 years. But that is probably overstated.
The most interesting part of the report to me is that the government now thinks it overstated job growth in the year through March 2007 by 297,000 jobs. It will later restate those months.
The employment numbers come from a survey of employers, but the numbers put out by the government are not what the survey found. Instead, the statisticians add a fudge factor, to account for jobs created by new companies that the government does not know about, less those lost when employers went out of business and did not respond to the survey.
In the 12 months through March, that fudge factor added 1,073,000 jobs to the total reported. The government now thinks that about a 1/4 of those jobs did not exist. Chances are that most of the overstatement came in the later months of that period, as the economy began to weaken, and that it is continuing now.
Since March, the fudge factor has added 839,000 jobs to the total. And the total increase it has reported, before seasonal adjustment, is 1,709,000. What all this means is that a significant part of the employment gains this year came from the fudge factor, or the birth-death model, as the government prefers to call it.
Of those 839,000 jobs added, 150,000 were in the construction industry. Anybody want to bet that the number of jobs created by new construction companies, less those lost from failed builders, is that high? Anybody want to bet it is positive?
Comparing pre-seasonal adjustment figures to figures after adjustment is risky, and the fudge numbers are not available on a seasonally adjusted basis. But it is worth noting that, after seasonal adjustment, the government thinks that over the last six months the economy has added 671,000 jobs — fewer than the fudge factor has added before the adjustment.
The bottom line is this: Job growth this year is mediocre if you accept the figures as reported. But we have good reason to think they are overstated, and will be revised lower at some point.
Today’s figures were better than many expected, but they do not indicate a strong economy, and they should not provide a reason for the Federal Reserve to conclude all is well with the economy."
Assuming Jobs
10/5/07
"The employment report is being hailed as good news, proof that the economy is stronger than it appeared after last month’s bad report.
Well, maybe.
As reported, the last 6 months have seen an average job gain of 112,000 — the lowest such figure for any 6-month period in 3 1/2 years. But that is probably overstated.
The most interesting part of the report to me is that the government now thinks it overstated job growth in the year through March 2007 by 297,000 jobs. It will later restate those months.
The employment numbers come from a survey of employers, but the numbers put out by the government are not what the survey found. Instead, the statisticians add a fudge factor, to account for jobs created by new companies that the government does not know about, less those lost when employers went out of business and did not respond to the survey.
In the 12 months through March, that fudge factor added 1,073,000 jobs to the total reported. The government now thinks that about a 1/4 of those jobs did not exist. Chances are that most of the overstatement came in the later months of that period, as the economy began to weaken, and that it is continuing now.
Since March, the fudge factor has added 839,000 jobs to the total. And the total increase it has reported, before seasonal adjustment, is 1,709,000. What all this means is that a significant part of the employment gains this year came from the fudge factor, or the birth-death model, as the government prefers to call it.
Of those 839,000 jobs added, 150,000 were in the construction industry. Anybody want to bet that the number of jobs created by new construction companies, less those lost from failed builders, is that high? Anybody want to bet it is positive?
Comparing pre-seasonal adjustment figures to figures after adjustment is risky, and the fudge numbers are not available on a seasonally adjusted basis. But it is worth noting that, after seasonal adjustment, the government thinks that over the last six months the economy has added 671,000 jobs — fewer than the fudge factor has added before the adjustment.
The bottom line is this: Job growth this year is mediocre if you accept the figures as reported. But we have good reason to think they are overstated, and will be revised lower at some point.
Today’s figures were better than many expected, but they do not indicate a strong economy, and they should not provide a reason for the Federal Reserve to conclude all is well with the economy."