Heritage Foundation’s EJ Antoni has been describing the gap between the establishment NFP series and the CPS employment series as the basis for evidence of mismeasurement of employment by the CES. Goldman Sachs notes today (Peng, “Revised Immigration Estimates Will Close Much of the Payroll-Household Employment Growth Gap in January”) that new Census estimates of immigration will imply a big revision in population controls used in the CPS employment series.
Source: Peng, “US Daily: Revised Immigration Estimates Will Close Much of the Payroll-Household Employment Growth Gap in January,” US Daily, Goldman Sachs, 14 January 2025.
By my calculations on what they report, I was pretty much on the mark for what the revised CPS adjusted to NFP concept series would look like through mid-2024 (I didn’t have the CBO estimates for July 2024-June 2025 at that time). The revised CPS series adjusted to NFP concept should be moved up to roughly where the preliminary benchmark implied NFP is in December.
Figure 1: CES Nonfarm payroll (NFP) employment series (black), implied preliminary benchmark CES NFP (gray), CPS employment adjusted to NFP concept (green), and Goldman Sachs implied revision for December (light green square), all in 000’s, on a log scale. Source: BLS via FRED, BLS, Goldman Sachs, and author’s calculations.
Hence, the majority (3/4) of the gap between the CES and the adjusted CPS series is due to a difference in estimated population controls, with the remainder of the gap essentially accounted for by the overcount in the NFP.
It was recently noted in a comment (which I can no longer locate?) that the yuan is under pressure. Here’s the picture:
https://fred.stlouisfed.org/series/DEXCHUS#
There are other signs of trouble. Here’s China’s credit impulse index, along with housing prices and stocks:
https://en.macromicro.me/collections/31/cn-finance-relative/35559/china-credit-impulse-index
As noted at the link, credit flows in China are more directly linked to housing than to GDP. Housing was a very large part of GDP growth prior to the collapse, so the distinction may be less clear now than in the past. Just eye-balling, it looks like stock prices respond with a lag to credit and housing. The government is intervening to prop up all three, with results not all that positive.
Just to connect these bits and bobs to other recent posts, let’s assume Rhodium Groups is close to right about Chinese growth:
https://econbrowser.com/archives/2025/01/rhodium-group-another-estimate-of-chinese-gdp-growth
The problems reflected in Chinese financial data are on the one hand a reflection of China’s poor economic performance, on the other hand an encumbrance to China’s economy getting better.
China is a benefactor to Russia, and Russia needs help:
https://econbrowser.com/archives/2025/01/impending-systemic-financial-crisis-in-russia
China’s steady deterioration makes any useful aid to Russia less likely. To the extent that China’s slowdown is responsible for reduced demand for Russian oil, harm to Russia is already piling up.
Lastly, we can tie China’s poor prospects to just about anything Menzie writes about the U.S. economy, since China is a big part of the global economy, one if our largest trading partners and one focus of Trump’s tariff crazy.
I’m such a worrier.