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
This is scheduled to disappear from Yahoo soon — I wanted to capture it before it went away. Its a criticque of Supply Side economics by Charles Wheelan, former US columnist for the Economist, and at present an economics and public policy professor at the University of Chicago and visiting prof at Dartmouth College. Wheelan is the author of Naked Economics: Undressing the Dismal Science.
Debunking One of the Worst Ideas in Economics
Wednesday, May 3, 2006
"In this column, I’m focusing on bad economics. In fact, I’m going to write about what I consider to be the two worst economic ideas — or at least ideas that pass as economics, though both have been thoroughly repudiated by nearly all credible thinkers.
When I say worst, I don’t mean the most outlandish (e.g. stock prices are controlled by aliens) because those ideas usually collapse of their own weight. Rather, the most pernicious bad ideas in economics are those that have a ring of truth. They’re hard to debunk because they have a certain intuitive appeal. As a result, they stick around, providing bogus intellectual cover for bad policy, year after year, decade after decade.
For the sake of political balance, I’ll skewer a favorite of the right in this column, and then a favorite of the left in my next piece.