On Nov 6, 2007, at 6:52 PM, ira wrote:
> You say that
>
>> They do not "create statistical jobs that do not exists."
>
> But then you go on to say
>
>> So the establishment survey undercounts employment in the early
> stages of recovery and overcounts at the onset of slowdowns or
> recessions. Since there's a good chance we're early in a slowdown, if
> not an outright recession, that's a real issue now. About 80% of
> the new
> jobs in the establishment survey so far this year have come from
> the b/d
> model. It's quite possible that those jobs don't really exist.
>
> If 'It's quite possible that those jobs don't really exist', then
> haven't they in fact "created statistical jobs that do not exist."
I was objecting to the broadness of the phrasing - he makes it sounds as if it's their habit. The b/d model tries to capture things that the regular monthly survey can't, and most of the time it's right. Yahoos like John Crudele sometimes accuse the BLS of cooking the books, which they don't.
It works both ways, too. Sometimes the survey undercounts, even with the b/d model. The employment counts undergo a process called benchmark revision every year, which is based on the unemployment insurance records. They have something like a 99% coverage of the (on- the-books) employment universe. Every year, the BLS "benchmarks" the monthly surveys to the UI records, revising the sample estimates to match the full coverage. In March 2006, they revised their count upwards by about 800,000, or 0.6%, to reflect the jobs that had been created during a strong period in the job market that the monthly survey, even with the help of the b/d model, was missing. I'm guessing that the current estimates will be revised down in the next benchmarking exercise.
> \\One more point (again, this is not a polemic: I'm trying to learn as
> much as possible) -- how can a well-known economics professor at NYU
> (formerly at Yale) be wrong on so basic an issue as
>
>> 'employment is a lagging indicator of the economy'
Good question. It's one of those things that you hear in the markets all the time that don't survive factchecking.
Doug