Peek Data

It’s sometimes interesting to give some thought to the things we believe, and don’t believe, about people. For some George W Bush is one of the most ruthless US Presidents we have seen in years, for others he is apparently the perfect gentleman, playing exactly by the rule book:

Financial markets may be all ears on Thursday night for hints about August job growth from President Bush, but they will be listening in vain since he plans to purposely avoid an early peek……………

“While the president typically sees the jobs data the evening prior to its release, he will not receive the jobs numbers tonight, nor will any of the people who are working closely on his speech,” said White House spokeswoman Claire Buchan.

Instead, Bush will wait with everyone else until Friday to see the hotly anticipated news.

The US Labor Department sends the data, due out at 8:30 a.m. today (Washington time), to the president’s economic advisers the night before. Normally there is not much importance attached to this, but this time clearly there might have been. I didn’t see the speech, but from the reports I’ve read, there was no special mention of the jobs state of play. Also, interestingly, there seems to have been no special reaction in the financial markets to this absence: they clearly see George as a gentleman. Whatever the numbers finally are (and we will still have to wait till later today to actually see them) I’m sure everyone will read the sub-text the way they want to, although clearly glowing numbers (which I personally am not anticipating) would give the most knee-jerk Bush critics a rather harder time.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

19 thoughts on “Peek Data

  1. The story I’m hearing is that it’s going to be circa 150,000 jobs, which is about 100,000 less than stellar. Considering that new unemployment applications were up to 362,000 the last week of August – the highest in months – I gotta say that the buzz is not good for Bush. Bush is certainly not placing the level of emphasis on the economy one normally would expect at this point in the election cycle. But this election seems to be even less about issues than usual. Even sympathetic reporting is more about the spin than the statements.

  2. Actually Scott they finally came in at 144,000, which means for once in their lives all those economists interviewed nearly got it right (the figure will, of course, eventually be revised up or down, but still). This is better, of course, than the two previous months (which have also been revised up) but far from a spectacular rebound. My guess is that the US economy is slowing a tad more than the consensus think, and that the ‘soft spot’ will continue to reveal itself in the employment numbers in the coming months: ie nothing disastrous, but insufficient to achieve lift-off. So with the need to get the deficit under control in 2005 whoever wins,those first moves upwards in interest rates only begin to seem more and more premature.

  3. My guess is that the US economy is slowing a tad more than the consensus think, and that the ‘soft spot’ will continue to reveal itself in the employment numbers in the coming months: ie nothing disastrous, but insufficient to achieve lift-off.

    kinda like the economic equivalent of the start of a little ice age: a gradual cooling of the economy with enough occasional bright spots to mask the downward trend. Nothing disastrous, mind you, until it is disastrous.

  4. http://www.jobwatch.org/

    Weakest job recovery since the 1930s

    Since the recession began 41 months ago in March 2001, 1.0 million jobs have disappeared from the U.S. economy, representing a 0.8% contraction. To put this performance in historical perspective, the Bureau of Labor Statistics began collecting monthly jobs data in 1939 (at the end of the Great Depression). In every previous episode of recession and job decline since 1939, the number of jobs had fully recovered to above the pre-recession peak within at least 31 months of the start of the recession (the average, excluding the 1991 recovery, has been 20 months to full recovery).

  5. I go to Bureau of Labor Statistics. I find this table and graph,

    data.bls.gov/servlet/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1

    giving the size of the civilian labor force, month by month, seasonally adjusted.

    It doesn’t have the data reported today. But as of last month the employed labor
    force was 147.7 million, while at the end of the Clinton administration it was 143.3 million.

    That’s a 4.43 million increase, or a +3.1%.

    I go to the site anne mentions, http://www.jobwatch.org/ , and find two tables giving
    total employment, but it’s strange: no source is given for where the data comes.
    That is someone reading the site can not track and confirm these numbers for him
    or herself.

    The second odd thing is that on closer examination the graphs that seem to be
    about employment, do not give employment directly, but instead are “Change in
    total employment, 41 months after the recession began.” That is this is an alleged
    comparison of different recessions and a narrow comparison at that.

    These graphs seem to conflict dramatically with the data at the Bureau of
    Labor Statistics site.

    Also curious, the very first graph of the jobwatch site, the first graph a reader
    would read, and which does not chart total employment, claims the Bureau of Labor
    Statistics as its source. If the authors are capable of giving the source for
    that chart, however vaguely, why not the rest?

  6. Hm. On the page Mark linked, as footnote to the table, I read: “1 : Data affected by changes in population controls in January 2000, January 2003 and January 2004.”

  7. Mark, jobwatch.org’s source is clearly the seasonally adjusted monthly non-farm employment changes:

    http://data.bls.gov/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001&output_view=net_1mth

    From January 2001 to August 2004, the total change was -966,000.

    If you factor in the change in population controls, the figure would actually be *larger*: for 2003, and 2001 and 2002 even more so, were years of falling employment, hence scaling up their sub-totals (by backward guesstimating what the figures would have been with the newer population controls) will push the 2001-2004 total also more to the negative.

  8. DoDo,

    The table you refer to

    http://data.bls.gov/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001&output_view=net_1mth

    is a table of one-month changes. It most definitely is not “total employment.”
    If this is the source of the jobwatch data then the jobwatch table is
    mislabeled.

    Second if we suppose the jobwatch table was mislabeled and it should have read
    one-month change in the 41st month after a recession began, then the sensible
    question would be what such a comparison would mean. After all it tells us
    nothing about the comparison in the 40th month, or the 39th, etcetera. In
    other words it tells us nothing overall about how the different recessions
    compare except the 41st month. And just why is that significant?

    Third, you state: “jobwatch.org’s source is clearly the seasonally adjusted
    monthly non-farm employment changes.” This is not clear to me at all. First
    of all when do you think the recession began? And second does in fact the
    job delta in the 41st month after match up to the jobwatch chart?

    I don’t think it does. And then we have to do the same exercise for all the
    other recessions being compared. Where is the data for that? Have you
    done this comparison? (In other words I don’t quite understand your confidence
    in asserting this is the source for the jobwatch data.)

    Fourth, you state “From January 2001 to August 2004, the total change was
    -966,000.”

    What that means of course is that you are summing up all the one-month changes
    for that interval to get a net change for that time. Now there are several
    things about that exercise that puzzle me. First of all why is it necessary?
    Why use a one-month delta table to reverse engineer a seasonally-adjusted
    non-farm total employment table? Surely the Bureau of Labor Statistics prints
    such a thing directly?

    Such as the table I found.

    See data.bls.gov/servlet/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1

    And then that raises an even more perplexing question. When I did a sum of
    changes calculation it does not match up to the total employment data that BLS gives.

    So I started poking around further.

    It turns out that BLS has two monthly surveys of employment: the household survey
    and the establishment survey.

    On the household survey, quote:

    “The information is collected by trained interviewers from a sample of about 50,000
    households located in 792 sample areas. These areas are chosen to represent all counties
    and independent cities in the U.S., with coverage in 50 States and the District of
    Columbia. The data collected are based on the activity or status reported for the
    calendar week including the 12th of the month.”

    On the establishment survey, quote:

    “The employment, hours, and earnings data are based on payroll reports from a sample
    of over 390,000 establishments employing over 47 million nonfarm wage and salary workers,
    full or part time, who receive pay during the payroll period which includes the 12th
    of the month.”

    DoDo, since the data you cited is titled “employment, hours, and earnings” and since
    it’s “nonfarm” I think we can conclude it’s from the establishment survey.

    Since the data I cited has adjustments for census data, which obviously must occur
    when you’re sampling the population, I think we can conclude it’s from the household
    survey.

    Here’s a further quote for the BLS website:

    “The household and establishment data complement one another, each providing significant
    types of information that the other cannot suitably supply. Population characteristics,
    for example, are obtained only from the household survey, whereas detailed industrial
    classifications are much more reliably derived from establishment reports.”

    And that explains why when it comes to total employment all the BLS data will be derived
    from the household survey (and census). The household survey after all covers the
    establishments targeted by the establishment survey and for that matter everyone else, while
    the establishment survey covers only the establishments.

    If we assume the establishment survey is the source of the jobwatch data, we might guess
    why they are so evasive about their source. For one their “total employment” is not
    total employment but instead only employment at the large companies covered by the
    establishment survey. That also explains why their chart was published with percent
    changes in employment instead of employment numbers directly. After all many readers,
    seeing a total employment figure of only 46 million, would think something was amiss.

    Tidying up, DoDo you suggested: “If you factor in the change in population controls,
    the figure would actually be *larger*: for 2003, and 2001 and 2002…”

    No, it wouldn’t. The establishment survey has no population controls. The census doesn’t
    enter into it.

    Finally the fact that farm employment is not included in the establishment survey
    is the least of what is not included. In fact I think that BLS needs to do a better
    job of labeling their data. It may be obvious to a BLS employee which is establishment
    survey and which is household survey without it being labeled directly but it’s hardly
    surprising that others might be confused.

    On the other hand it does seem a bit unnatural exercise to go to a one-month job change
    chart and sum up to derive a total employment when there are already total employment
    charts and data prominently labeled and displayed as such by the Bureau of Labor
    Statistics.

  9. Mark, you wrote a long long reply in response to my first two posts, even tough I abadoned them in my third post, which – and the link presented in it – you ignored. (You even ask me why I put forward only monthly net change data!…)

    So I repeat: It seems we have a case of apples and oranges, you mix total employment with total non-farm employment – yet both the net change of 144,000 in August originally discussed, and the jobwatch.com figures refer to the latter. (Which should have already been pretty clear to you from the monthly data in my first data.bls.gov link: they mention those for June, July and August in the text.)

    Below is again the link for the total non-farm data, in graphs and tables.

    http://data.bls.gov/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CES0000000001&output_view=data|

    There you have it, substract this August’s data of 131,475,000 from 132,507,000, the March 2001 data of jobwatch.com refers to, it is 1,032,000 (non-farm) jobs lost.

  10. While I disowned my earlier argumentation, the subject you (Mark) brought up, household survey vs. the establishment (or payroll) survey, is an interesting one. I will quote below from a Billmon article, within it quotes from the Cleveland Federal Reserve and Alan Greenspan:

    The issue is not whether the household survey is inaccurate – all economic surveys are, up to a point. But … the household survey isn’t designed to tell us how many jobs the American economy creates each month. It’s purpose is to tell us what percentage of the American workforce is employed – using the special definitions applied by the Bureau of Labor Statistics.

    The Cleveland Federal Reserve published a very clear, non-jargony paper on this topic just a couple of months ago, if you want chapter and verse. But the short form is roughly this:

    Because the survey is based on a relatively small sample, the BLS uses a population estimate from the Census Bureau to extrapolate the survey into results for the national population. If the census estimate is wrong, the national results will be wrong, too.
    Some results, however, will be more wrong than others. Because the unemployment rate (and a related measure, the employment-to-population ratio) have the Census Bureau’s population estimate on both sides of the equation (the numerator and the denominator) they’re less affected by an error in the census data. The estimate of total employed individuals, however, can be thrown be wildly off..

    This, as it turns out, is exactly what happened during the 2001-2003 period, when the payroll survey was showing huge job losses, while the household survey was showing moderate job gains. As the Cleveland Fed explains:

    In its most recent review of the population, the U.S. Department of Census determined that it had overestimated the U.S. population for the period from 2000 to 2003 primarily because of unanticipated changes in net international migration patterns.

    As a result, the BLS notes that the upward trend in the employment estimates produced by the household survey since the end of the 2001 recession is largely a function of this overestimate.

    In fact, through the end of 2003, the accumulated overcount of the estimate of employment in the household survey was nearly half a million workers. (emphasis added).

    The household survey, in other words, was giving a reasonably accurate reading on the unemployment rate, a reasonably accurate reading on the employment-to-population ratio, and a completely bogus reading on employment growth…

    …the accuracy of the household survey as a job creation measure has been disavowed even by Alan Greenspan… As the Great One himself told Congress last February:

    “Having looked at both sets of data … it’s our judgment that as much as we would like the household data to be the more accurate, regrettably that turns out not to be the case.”

    http://billmon.org/archives/001624.html

  11. Finally, I venture a causal thought I haven’t researched at all, could it be that the apparent growth in farm jobs was a result of illegal immigrants already working on farms getting legalised?

    (I say apparent growth because it is unlikely either the payroll or the household survey are off by millions.)

  12. Damn, Mark, I have still not examined your link closely enough! It’s not even the total employment figures, but the civilian labor force! Quoting from http://www.bls.gov/cps/cps_htgm.htm, The sum of the employed and the unemployed constitutes the civilian labor force. (i.e. total working-age population minus housewifes and long-time jobless without jobless benefits). Here is the correct link for the household survey-based total employment:

    http://data.bls.gov/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS12000000&output_view=data|

    Finally, the Bureau Of Labour Statistics also produced two tables with pre-2004 data “smoothed” for the population controls adjustion, for the total employment figures, see the last (fourth) page in this pdf: http://www.bls.gov/cps/cpspopsm.pdf

  13. #Dodo: on the Household vs. the Payroll Employment Survey you can also have a look at this post on the site of Brad de Long (if you forget about the spam comments you can find an interesting discussion; starting from Greenspan’s statements.

    However, like in the discussion on Daniel Pipes (!) here too I get the feeling there is too much focus on details. On my own site I put some graphs (made with the bureau of labor statistics). Developments for 1994-2004. The trend is similar on a lot of graphs. (you will have to look there, I can not post pictures here of course).
    You really should not focus on the numbers for august (or september / october).

  14. Frans, unfortunately, I adhere to “the devil is in the details” philosophy 🙂 On the other hand, those figures on your page under each other are indeed impressive. And the average number of weeks unemployed figure implies what I have only deduced from one devil in the detail previously, that reductions in the number of jobless during Bush also come from reductions of coverage.

  15. Thank you for all those devilsh details DoDo. I want to plug Kasriel’s site for an even, balanced and very broad view of this employment report.

    http://www.northerntrust.com/library/econ_research/weekly/

    His view is that it is hard to imagine Greenspan continuing with the increases given this latest installment. Comparing this recovery to average recoveries since WWII, this one, in his view is a little anemic: nearly 10 Million jobs short of the average recovery 11 quarters after the trough.

  16. calmo, thanks! I found this bit most interesting:

    “Household Survey – The unemployment rate edged down to 5.4% in August from 5.5% in July. The decline … reflects a contraction in the labor force (-152,000) and a small increase in employment (+21,000)… The nation’s unemployment rate overstates the strength in the labor market. In August, the participation rate (civilian labor force as a percent of the civilian noninstitutional population) dropped to 66.0% from 66.2%. The unemployment rate does not capture the steady decline in the participation since the 2001 recession and the expansion thereafter. Typically, the participation rate increases as the economy recovers. By contrast, in the current expansion, the participation rate has shown a net decline in the entire expansion period…”

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