Posts filed under “Employment”
One last item:
"The Labor Department’s payrolls report is also at odds with its own survey of households, which is used to calculate the unemployment rate. The household survey showed employment grew by 387,000 in June, in line with ADP’s figures.
The enormous disparity of recent months coupled with the ADP data supporting the household-data implications raises important questions about the reliability of all three employment counts,” said David Resler, chief economist at Nomura Securities International in New York." -Bloomberg
Umm, no — that’s simply incorrect (and Bloomberg and Nomura Securities ought to know better).
For the record: The Labor Department’s Establishment Survey (aka NonFarm Payroll report) number of 121k WAS NOT AT ODDS with its own Household Survey of 387k. These two reports measure two very different things. The numbers can be off by a few 100k — and still be consistent with each other.
As we have discussed all too many times, the Household survey measures:
- Agriculture and related employment;
- Uncompensated Workers;
- Unpaid Family Employees;
- Part Time Workers;
- Workers absent without pay from their jobs;
- Self employed, Work-at-home Contractors;
– none of which are counted in the Establishment (Non-Farm Payroll) Survey.
In fact, the BLS specifically looked at and compared the two data series back in 2004. Once they made an adjustment so both surveys were counting the same thing, the huge gap disappeared.
I seriously challenge the expertise of any economist that fails to recognize the different data series.
This is something I would hope that mainstream economic reporters would understand — even if they are not economists (i.e., Bloomberg!). Any reporter that dutifully repeats this tripe has been punk’d. If this is your beat, and you are not familiar with these two survey methodologies, than you better get up to speed quickly. Especially if you are going to get dissed by some economist trying to cover his tracks on
a regular basis.
Here are the graphs from the BLS report:
click for larger graphics
Note: This isn’t a new development — these are from 2004.
ADP Job Survey Loses Luster Among Economists After June Miss
Bloomberg, July 7, 2006 15:09 EDT
BLS on Payroll vs. Household Survey
The Big Picture, March 14, 2004
Today’s NFP number stunk the joint up: 75,000. That’s half of the monthly population growth, meaning the percentage of people working (relative to pop) actually went down, if we are to believe this data.
Astonishingly, some people STILL do not understand the data or the context of the weak job growth within this recovery. To wit, my friend Cody Willard – a telecom strategist – writes:
"Surely, Barry, you’re not seriously trying to rekindle your argument about "job creation is not what it is typically at this phase of a recovery."
That statement has been a cornerstone of your bearish rants for the last couple years. Yes, I know you’ve been a "trading bull" and what not, and rightly so, but this economic argument of yours has been, in my view at least, wrong for the last few years and now that job creation is finally starting to slow — years after your repeated flagging of how this "recovery" (You still call this a "recovery" btw?)"
Ahhh, poor Cody. He is lost in a sea of data, unable to see the truth. He believes the spin.
Rekindle? Just because you close your eyes, the boogie man doesn’t disappear.
Hey Cody, please cite me some data revealing this to be an above-average private sector jobs creation recovery. Hell, I’ll take average.
You won’t, because you cannot.
Cody is engaging in several analytical foibles, but the best way to describe it is "ignore reality." But his subjective error does not change the objective reality for the rest of us: By any honest measure – e.g., NY Federal Reserve or Cleveland Federal Reserve research — this has been the worst modern jobs recovery on record.
This is not a meme I am pushing or a Bear story I fabricated.
It just “is.”
This doesn’t mean you run out and short everything; as I wrote last December, one should Never Confuse Economic Analysis With Trading.
But comprehending the reality of the economic situation is important. Why does this matter? What Cody fails to consider is the importance of understanding the specifics of how a recovery comes about, and how it compares to prior recoveries. What it means as the massive government stimulus that goosed the economy begins to fade. What happens when the Pig is finally thought the Python?
I expect that as we begin to slow, there ain’t a whole lot of fat to get sliced. As unemployment starts ticking up, it will not be pretty. It suggests the next recession will be more severe than the last one.
UPDATE: June 2, 2006: 12: 47pm
Cody and I finish the debate below