Annual Job Revisions
Along with its monthly jobs report the BLS produced annual revisions, emphasis mine.
Effective with data for January 2022, updated population estimates were incorporated into the household survey.
In accordance with usual practice, BLS will not revise the official household survey estimates for December 2021 and earlier months.
The adjustments increased the estimated size of the civilian noninstitutional population in December by 973,000, the civilian labor force by 1,530,000, employment by 1,471,000, and unemployment by 59,000. The number of persons not in the labor force decreased by 557,000. Although the total unemployment rate was unaffected, the employment-population ratio and labor force participation rate were each increased by 0.3 percentage point. This was mostly due to an increase in the size of the population in age groups that participate in the labor force at high rates (those ages 35 to 64) and a large decrease in the size of the population age 65 and older, which participates at a low rate.
Data users are cautioned that these annual population adjustments can affect the comparability of household data series over time. Additional information on the population adjustments and their effect on national labor force estimates is available at www.bls.gov/web/empsit/cps-pop-control-adjustments.pdf.
Job Level Revision Notes
- A positive number in the lead chart indicates the BLS underestimated jobs in the given month
- A negative number in the lead chart indicates the BLS overestimated jobs in the given month
- The BLS underestimated jobs for the first 5 months of 2021 plus December.
- The BLS overestimated jobs every month between June and November, 6 consecutive months.
- The sum of overestimates totals 2,507,000
- The sum of underestimates total 1,890,000
- The final revision in December was up by 211,000
Every Job Report in 2021 Was Total Garbage
The BLS will counter that the error rate is tiny. It is, if you divide by the total number of jobs.
For example, the total level of jobs in December of 2021 was initially reported as 148,951,000 and revised to 149,162,000.
The revision was only (211,000 / 148,951,000) * 100 = 0.142%
Yet, in monthly gain-loss report, which every economist watches, the revisions are not only huge, but ongoing.
The first 5 months of 2021 were hugely understated, followed by 6 months of overstatements, then ending with a 211,000 understatement.
Let that sink in. The jobs market was weaker than reported every month between June and November.
Add it all up and there is only one proper conclusion: The monthly jobs reports are garbage but ending with a December and January surprise.
Published BLS Data is Poisoned
Nonfarm Payrolls Were Another Big Upside Surprise to Economists, What Happened?
What happened was massive annual revisions. Those revisions do not change my recession opinion, my economic outlook, or my stock market expectations.
For a discussion of the surprise, please see Nonfarm Payrolls Were Another Big Upside Surprise to Economists, What Happened?
For recession discussion, please see With Nearly Everyone Looking the Other Way, It’s Time to Discuss Recession.
For stock market discussion, please see FAANG Roulette Continues With Huge Swings in the Price of Amazon.
This post originated at MishTalk.Com
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Mish
Even
incomplete data has usefulness if one can find the holes and fill them in by
finding proxies. Data is never complete nor always accurate. It’s hard enough
for things we can touch, measure and feel let alone for things that are
immaterial. The only reliable data in financial markets are prices because they
are always recorded. They tell us the past but not the future. That job is up
to yourself.
What I said
is meant for the financial markets only and shouldn’t be generalized to other
areas. In financial markets all prices are recorded. We know at what price
Exxon traded at 10:32 on the 7th of April 1998 because it has been
recorded. We have an exact record of prices for everything bought and sold.
That is certainty itself. When you use proxies for missing data in the
financial markets you know very quickly if you are right or not because your
cash balance will tell you. Climate change is another subject and one where
even the base data is highly inaccurate because of difficulties in measurement
and interpretation. There is no congruity between the two.