Saturday, February 02, 2008

Trend Employment Figures

I'm grumpy and looking for a fight right now after spending most of the day playing plumber, and I am a really bad plumber, and moderating our comment section for the evening. However when I popped over to the Corner via Memeorandum for a commentary on the recent January jobs report, I have to agree with Ponnoru:

Seems to me that everyone is making too big a deal out of the January jobs report. My local paper's top story was the estimate that the total number of jobs fell by 17,000. If that estimate is revised later, to look better, I'm guessing it won't be the top story. And such a revision is very possible.....

He then makes an implied media negativity bias claim, but he is right on the face of it, any one datapoint is merely interesting but analytically of low value. However looking at the bigger picture and the trends, even if the drop in jobs is later revised to show a gain of 20,000, 40,000 or 80,000 jobs, the story remains the same. Employment growth is slower than population growth, and the labor market is slack right now. Barry Ritzholtz has a good graph of the revisions and benchmark changes in employment for the past year. Any month with more than 170,000 new jobs is a great month, anything below 140,000 is less than population growth, and below 100,000 is mediocre at best

We have not had a good month since last May, and within the past seven months, there has been one mediocre month (July), five slow growth months, and an initial negative month (January) dependent on revisions. The trend here is not our friend.

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