In a post from Sunday, I noted that NFP employment might be overestimated, but trends were generally aligned. Noting how the Business Employment Dynamics (BED) and Quarterly Census of Employment and Wages (QCEW) data have provided different signals, Steven Englander at Standard Charter has calculated how much overstatement there might be.
Source: Steven Englander, “How Accurate is NFP,” Standard Charter, July 11, 2023.
The difference between estimated (using 2012-2023 fit of NFP on one year of lagged QCEW and NFP) is about 500,000 at 2022’s-end. He observes that the birth-death model for firms might be the source of the difference.
Source: Steven Englander, “How Accurate is NFP,” Standard Charter, July 11, 2023.
Interestingly, the 500,000 is remarkably close to the 616,000 indicated by the Philadelphia Fed’s early benchmark (572,000 for April 2023, last observation estimated). The gap is shown in the figure below (difference between blue line and red line), drawn from this post.
Figure 1: Nonfarm payroll employment from CES (blue), CPS household series adjusted to NFP concept (tan), QCEW total covered aggregate, seasonly adjusted using X-13 (green), all in 000’s, s.a. Source: BLS via FRED, BLS, BSL-QCEW, Philadelphia Fed.
The CPS based employment series are not subject to error arising from the firm birth-death model. While that the civilian employment series adjusted to the NFP concept is about 1.85 million below the actual NFP as of June 2023, there has long been a gap between the two series. More interesting perhaps is the change in both series since 2021M06. There, reported NFP has grown 278,000 more than the CPS derived series.
So, while there is some evidence that NFP employment is growing more slowly than reported, it looks like the cumulative difference since mid-2022 it is not likely to be in the millions.
The one thing I would caution about is that the Philly Fed’s estimate, to the best I am able to decipher its report, actually ends with December 2022. The Jan-Mar 2023 figures are nonfarm payrolls starting from the estimate’s Dec 2022 endpoint.
But we had a similar situation 6 months ago with Q2 2022’s poor QCEW report, that then got revised away.
One possibility for the divergence between the household and establishment surveys, btw, is self-employed people (note the record surge in new businesses post-pandemic) throwing in the towel and finding employment with established firms instead.
On a completely different note, weekly consumer spending as measured by Redbook went negative YoY for the first time post-pandemic this week.
@ New Deal
I’m asking this question in a VERY respectful way. I know your math skills, etc, etc are way better than mine. But do you admit at this point in time it was wrong to predict a recession in 2023??? You wish to say NBER-BCDC is “wrong”??
A little premature to do a report card for the second half of 2023 (!), but as to the first half it certainly looks like we avoided a recession.
For some reason Prof. Chinn is still using Jan 2022 as his starting point, but here’s a look at the scorecard using Jan 2023 as the potential peak of activity, except for those items which peaked earlier:
Industrial production: down -0.5% from 9/22 peak
Real manufacturing and trade sales: down -1.6% from 1/23 peak
Real spending: up +0.1% since 1/23 (consistent with about half of all recessions in past 60 years)
Real personal income less transfer receipts: up +0.3% from earlier 9/22 peak (all due to May)
Payrolls: up +0.8% since 1/23
All of this is subject to that bugaboo of forecasting: revisions.
Aside from the tailwind of gas prices falling from $5 to $3/gallon in the second half of 2022, the biggest reason Fed rate hikes haven’t caused a recession yet are pent-up demand for motor vehicles (employment in the goods producing sector is *down* since January ex-vehicle production), and the supply-chain-related logjam in housing construction (meaning construction employment has also barely declined).
Hope that is responsive.
You can guess what I want to type (as the immature/shallow man that I am) about ….. how Barkely Rosser would respond to this…… I appreciate HOW you responded. I feel it’s an interesting question, I DO NOT know the answer. That’s why I ask it. Having a drink now (you guessed??)
God Bless you Sir. Honestly, no sarcasm. I appreciate you, and not getting “low down” (as my habit is want) as my habit is (tips my newsboy cap to you Sir.
Off topic but I must. The MAGA hatters have no bottom when it comes to trying to screw Biden with false charges against his son:
https://www.msn.com/en-us/news/us/lindsey-graham-fires-back-after-hunter-biden-prosecutor-refutes-irs-whistleblower-i-don-t-trust-the-doj/ar-AA1dJvX5?ocid=msedgdhp&pc=U531&cvid=c916f03ab15b4ea6bc49094ba58b034d&ei=10
The U.S. attorney handling the Hunter Biden probe once again contradicted claims from an IRS whistleblower in a letter to Sen. Lindsey Graham Monday. On “Hannity” Monday night, the South Carolina Republican challenged David Weiss’ letter, noting he is determined to find answers in the increasingly complicated investigation. don’t trust them. They got to come forward under oath and testify. So here’s what the whistleblower has said, the group of whistleblowers, that Hunter Biden got the benefit of the doubt unlike anybody they’ve ever seen, and they’ve been there for decades, that every time there was a question, it wound up being in Hunter Biden’s favor. They claim that Mr. Weiss, the U.S. attorney from Delaware, sought special counsel status and was denied that status and that he wanted to bring charges in D.C., and California, but he was told no.
Wait – isn’t this whistleblower under investigation for being a Chinese spy? As well as a serial liar? Oh wait – little Lindsey will probably accuse the FBI of deep state behavior for investigating this alleged whistleblower.
Hunter Biden was pursued by the special persecutor for having failed to file his taxes in time, for two years where he was in a haze. Then also for having lied on an application for a gun permit (claiming to be drug free when he was not). Those two crimes are almost never being pursued by the justice system. Failing to file in time is routinely forgiven as long as you then file and pay penalties (which Hunter Biden did). False statements about drug use on a gun application are almost impossible to prove and never pursued unless that gun is being used in a crime. The special persecutor office used millions of dollars to dig up political dirt. Trump decided to use government money for his own political benefit and the political hack he put in charge of it didn’t have the balls to admit that there was no “there” there – so he made a deal to make it look like there was.
If Graham want to hold hearing it should begin with the simple question of how often a million dollar investigation is initiated on someone who fail to file taxes two years in a row. How common is failure to file and how often does the IRS send such cases for criminal investigation?
https://www.bls.gov/news.release/cpi.nr0.htm
CONSUMER PRICE INDEX – JUNE 2023
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally adjusted basis, after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.
If we annualize the change in CPI over the past 2 months, inflation would be less than 2% per year. Of course the usual babbling fools on MSNBC are telling us inflation is 3%.
It has been clear that Trump would just give Ukraine to Putin. This makes it official:
https://www.msn.com/en-us/news/politics/trump-denounces-biden-s-decision-to-send-cluster-munitions-to-ukraine/ar-AA1dJeLs?ocid=UCPNC2&pc=U531&cvid=62a8f3bb22bc4c77940eb65c1ac9478b&ei=17
Former President Donald Trump on Tuesday condemned President Joe Biden’s decision to send cluster munitions as part of a new U.S. aid package to Ukraine, warning that it could lead to World War III. Trump shared his stance in a lengthy statement issued by his campaign. It comes five days after the Pentagon formally announced the decision, and a day after his former vice president and now rival for the GOP presidential nomination, Mike Pence, expressed support for the move.
“Joe Biden should not be dragging us further toward World War III by sending cluster munitions to Ukraine — he should be trying to END the war and stop the horrific death and destruction being caused by an incompetent administration,” Trump said.
I bet Xi will support Trump in the 2024 election because if this traitor gets to be our Commander in Chief again, the PRC will own Taiwan with no fuss.