Blogs & Comment

Lies, damned lies and job statistics

It turns out job losses in the United States were far worse than initially reported by the Bureau of Labor Statistics (BLS). On Friday, the government agencydisclosed that its count of job losses from April, 2008 through to December, 2009 was being revised upward by 38%, from 6.0 million to 8.3 million.
Its well known that the BLS monthly job reportsare preliminary and subject to revision. But surely, we can get better estimates than a nearly 40% miscalculation.
That magnitude of error pretty well suggests governments measurement efforts in this area may be a waste of resources. And by giving false impressions on the stateofthe economy, financial markets may be mislead into inappropriate responses. Specifically, would the stock market have rallied as much as it did if the stats came out closer to the mark the first time around?
As it turns out, we apparently can get better estimates of job losses as they are occurring (and not 18 to 36 months after the fact, like BLS provides). TrimTabs Investment Research publishes monthly estimates of U.S. job losses based on real-time daily income tax deposits to the U.S. Treasury from all salaried employees.
Their estimate of job losses over the period was 7.5 million, just 10% away from the revised BLS estimate. And the BLS number will probably will be much closer [to TrimTabs figure] after the agencys final benchmark revision February 2011, says TrimTabs.
For January, the BLS reported a job loss of only 20,000, which financial markets took as a sign that the job market is recovering. Meanwhile, TrimTabs’ estimatethat month was 104,000 losses, which suggests a rather different picture.