NEC Director Hassett makes reference to a GS note that indicates that August preliminary figures typically get revised up (NBCNews) The GS note (Walkers/Rindel, Sept 4) cites a 61K downward bias in preliminary vs. third release… so +22 becomes +83K.
I think I understand this point; what I do to check what seasonal adjustment processes affect things is to compare how different a 12 month change in the not-seasonally-adjusted series is from the corresponding change in the seasonally-adjusted series. Here’s the comparison.
Figure 1: 12-month log difference in seasonally adjusted NFP (FRED series PAYEMS) (blue), and in not-seasonally-adjusted NFP (FRED series PAYNSA) (tan). Source: FRED, author’s calculations.
The 12 month growth rate for the n.s.a. series is lower than that for the s.a. series. Not proof positive that seasonal adjustment processes aren’t doing something strange – just putting bounds on how much you can look to seasonal adjustment to make the outlook appear less dismal.
As an aside, industrial production is not at an all time high; the July reading was slightly below the June reading. More significantly, capacity utilization in July (77.5%) was down from the June 2024 rate of 78.2%.
August and September typically have the smallest of monthly seasonal adjustments:
https://fred.stlouisfed.org/graph/?g=1M5FK
Hassett’s excuse for August probably doesn’t explain weak readings in May, June and July, so focusing on August looks like misdirection.
Assuming Goldman is right (and that Hassett accurately represented Goldman) about the average revision, I’m not sure that seasonal adjustment would be the likliest explanation. A directional bias seems more likely to result from sampling problems.
Anybody have Goldman’s note?
Kevin Hassett today on CNBC: “Members of my family have been hired. Both of them started their new jobs about a week ago. And so you are seeing that people are being hired.”
Well then, let’s just scrap that error prone BLS survey of 120,000 businesses. We can just go with anecdotes about Hassett’s grandchildren. Everything is fine!