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October 04, 2004

An October Surprise On Jobs?

Friday isn't just the release date for the September jobs numbers. It's also the day the Feds announce their estimated yearly revision to 2004's jobs. In one day's report, Bush's fabled "jobs deficit" could be halved, cut in three, or even entirely eliminated.

My source Deep Stoat tells me that Friday will be even more interesting -- and possibly important -- than I'd thought. On that day, the Fed will announce by how many jobs it thinks it's either overstated or understated job growth throughout fiscal year 2004.

Could be a good day, could be a bad day. Deep Stoat won't say. (Actually, Deep Stoat probably doesn't know, but it makes me feel more important to hint that he knows but he's holding back.)

He sends along this National Journal piece (can't find the link, alas) and suggests that, if the revision is positive, the Democrats will scream that Bush is "misleading us" by "manipulating the economic intelligence."

Administration - On Jobs, an October Surprise?
By John Maggs
National Journal Magazine

9/25/04

Mark October 8 on your calendar. On the same day that John Kerry and George W. Bush are scheduled to clash in a debate, one of the most potent criticisms of Bush's economic record may lose most of its bite.

On that day, the Labor Department will announce September's unemployment figures, which either will show the job-creation slump of the past several months continuing, or will signal that employment growth is back on track.

More important, October 8 is also the date that the Labor Department squares the previous year's employment estimates with actual experience. And based on hints from other data on pay for workers, some Wall Street economists are expecting a hefty increase in the number of jobs created over the past year under Bush. If so, the final month of the presidential race may play out in a very different economic environment.

...

As a result, that 2.6 million job deficit since Bush's inauguration has fallen to 900,000 through August and sets the stage for a possible reversal next month. The first step toward having that happen will be September's job market. If Alan Greenspan is right and the economy has "regained some traction" in recent weeks after what he called a "soft patch" earlier in the year, then September may end up as more of a typical month for job creation during a recovery. That could mean from 250,000 to 350,000 more jobs for the month -- March had 353,000 and April 325,000.

...

A look at past revisions reveals a pattern -- the survey of businesses tends to overcount jobs created during a recession and undercount them during a recovery. (See chart, p. 2905.) ...For the two years that covered the 1990-91 recession, the overcount was nearly 900,000 jobs. But the math goes the other way during expansions -- look at the 1990s boom and you see that Labor undercounted the jobs being created, as revealed by how many people applied for unemployment benefits. From 1993 through 1995, Labor undercounted the number of jobs created by more than 500,000 a year, or about 15 percent of the total.

If the real recovery in employment began in the summer of 2003, as it now seems, then history would suggest that a revision upward is likely on October 8. And there is another reason that some economists who look closely at these numbers are expecting a big increase. So far, compensation for workers has grown healthily, while workers' average wages aren't rising as much. That would suggest that there are more workers out there than have been counted so far. ....

Ethan Harris, chief U.S. economist for Lehman Brothers, is among those who closely watch the job figures, and he said experience shows that the adjustments can be large. David Wyss, chief economist with financial publisher Standard & Poor's, said it would be expected that the benchmarking by Labor would raise the estimate of job creation in a recovery.

There is yet another reason to expect a revision upward in the job numbers.

The most widely cited number for job creation is based on what's called a "payroll" survey of businesses. But another survey by the Labor Department estimates job creation by polling 60,000 households. Most economists consider the household survey less accurate, and it isn't cited nearly as often, but it has gained some adherents in the Bush administration because it suggests that the number of people working has increased under Bush. Economists have been debating for decades about the advantages and shortcomings of the two surveys, but the gap has grown recently between the two estimates. In fact, it has never been wider.

So, how big could the upward revision be on October 8? The average yearly revision since 1979 has been 257,000, and the average of all upward revisions is 308,000. In 2000, there was a positive revision of 468,000.

What this means is that a decent September for job creation, added to an average-sized revision for a recovery, could wipe out half or two-thirds of the remaining 900,000 deficit in jobs under Bush. It is conceivable that almost all of the deficit could disappear next month.

Absolutely no cowbell for speculation, so don't even ask. Don't you guys believe in jinxes?

Update: Link here.

posted by Ace at 01:24 PM

Comments

Your source has the coolest internet handle. Hope he's right.

Posted by: Moonbat_One on October 4, 2004 01:55 PM

Well, I named him that. He's not really on the internet; he's actually a "government source."

Posted by: ace on October 4, 2004 02:05 PM

He may or may not be a "narrative device" composed of several different sources blended together in order to sell a book and/or screenplay.

I will not say until he has died.

Posted by: ace on October 4, 2004 02:06 PM

If these numbers are *really* positive on Friday I demand cowbell. Lots of cowbell. And maybe that Drudge-style red light.

Promise?

Posted by: Birkel on October 4, 2004 02:19 PM

I don't want to say, because I don't believe in counting cowbell before it's clanged.

Let's just say that positive jobs news is what the cowbell was created for.

Posted by: ace on October 4, 2004 02:20 PM

The household survey is largely dismissed by Greenspan and other neutral economists as not having validity in measuring true job creation, based on polling techniques and family's inaccurate responses...self-shielding on status...in denying household members are in fact jobless.

It goes like this. Man finds his electronics engineering job outsourced to China. Nothing else similar in job opportunities currently exists within 200 miles of his Ohio residence. He finds some work painting a friends house, doing part-time lawnmower repairs. To the globalist faction of the Bushies now pushing jobs overseas - that makes the man a "Self-Employed Business Entrepreneur" under the Household Survey, and he has a gainful job. His wife has to go to work based on his now making about 200 bucks a month, and she gets a job on the 12-5 shift in a shoppe that sells scented candles made in Pakistan. Chalk up another job creation victory according to the Household survey. And the couple lies about their daughter, who has a part-time fast food job...not so hot...so they tell the survey group she is a telecommunications consultant for the Entrepreneur Dad, because ahe has taken some calls scheduling a lawnmower repair dropoff for him. Chalk up another new exciting jon on the Household Survey tabulations!

So for the election, the media is mostly sticking with payroll numbers as the credible stats for job creation. Everytime Mankow or one of the other "things are just wonderful in the economy" cheerleaders attempts to bring up the vast, vast, number of new "small biz" entreprenurial jobs not accounted for - they get laughed off.

Posted by: Cedarford on October 4, 2004 02:26 PM

Cedarford, you mindless slut:)

Outsourcing is either an anal retentive reflex or good news, depending upon what you are told versus the truth of the matter. I used to cringe everytime someone from the administration would say outsourcing is good for the economy and overall job growth. Until I read why and from people who know why. Maybe you should?

Also, your scenario assumes one thing that all the big word snobs do: Americans are all liberal liars that wouldn't be caught dead without a job. That is arrogance personified.

Posted by: on October 4, 2004 02:40 PM

Cedarford,

Did you try reading Ace's post? Nothing in the post suggests the jobs revision is dependent on the household survey. The two numbers are mentioned to point out some of the disparities. Oh, and Mankiw didn't mention the household survey either. Please don't conflate issues. It makes you look like a moonbat...

Otherwise, what the hell is wrong with painting houses? Could your example be reversed. Guy loses job at manufacturing plant that paid $12/hr. Starts to paint houses and is paid by the job. Makes considerably more money. Impossible? That's the great thing about using anecdotes to argue--anybody can do it. YEAH ANECDOTES!!

Assuming you're a liberal, why are you against people performing an unskilled task? Or a skilled trade like painting? Puh-lease.

Posted by: Birkel on October 4, 2004 02:41 PM

Don't cry for me; I'm already dead.

Posted by: Deep Stoat on October 4, 2004 02:42 PM

The person who posted without a name was less kind than I.

Bet a dollar I know more about econ and int'l trade than you do, Cedarford. Wager a buck?

Posted by: Birkel on October 4, 2004 02:45 PM

As Birkel says: Read.

This is not dependent on the household survey. It's a revision done every year based upon a better, year-long re-evaluation of monthly calculations of job creation. The household survey is mentioned as one (1) factor suggesting a big upward revision.

But the revision is not based on the household survey. The household survey is just used as tea leaves to divine what the revision will be.

The main evidence is the trend of upward revisions during recoveries. Which, by the way, we're in.

Posted by: ace on October 4, 2004 02:47 PM

Ace-

The best 101 moments of SNL was on some cable channel last weekend. The cowbell skit was in the top 10.

Posted by: Jimmy P on October 4, 2004 02:53 PM

Ace,

one distinction, the Fed doesn't put out the Employment Situation Report, it's the Bureau of Labor Statistics.

Really, the bigger October surprise might be over at cnsnews.com

Posted by: Charles on October 4, 2004 02:54 PM

Well, if the news pans out, we'd better get our frickin' cowbell, you no-cowbell-givin' bastard.

Posted by: Monty on October 4, 2004 02:57 PM

One has to wonder what the thought process was within the Bush campaign in agreeing to the specific timing of this debate. Although they may feel confident about the September jobs numbers and the revisions that will be released on October 8, they cannot know for certain what they will be. And if they are not good, it will be very, very bad for them, at least within the context of the dynamic of the discussion that night.

It just seems as if the risk is disproportionately on their side, and that perhaps they should have insisted on Thursday being the day of the second debate. If that was an option, of course.

Posted by: HT on October 4, 2004 03:19 PM

You want cowbell? I've got yer cowbell right here, ya frickin slackers!

http://www.bustedtees.com/product_info.php?products_id=84

Posted by: Mr. Bowen on October 4, 2004 03:38 PM

Birkel -

I have a MBA. I no more trust the neocon school of "supply side, free trade" economists theories than I trusted Arthur Anderson -style theories on creative business accounting.

The Household Survey is important because the Bushies have tried to use it several times to argue that the tax cuts are producing tremendous job creation. But Greenspan and others have shown fact checks on what familes say, vs. reality, ate two different things. So the survey gets little credibility, even as certain Bushies keep crying that 3 million or so wealthy entrepreneur and small family biz jobs aren't counted and try pressuring BLS to jack the numbers up.

This comes up every year, ACE.

I personally think it is long past due that US labor analysis and official stats move into the modern age and accurately measure household wealth and jobs, and count those long-term unemployed.

BTW - Your logic that going to a low-paying service job from a manufacturing one is generally a boon, because it leads to entreprenurial wealth is fatuous, in that we already know from outsourcing stats that it leads to an average 30% drop in pay. Arguments to the contrary are just an replay of The Famous Amos Fantasy.

BTW - I am politically neutral on this. We all know the Bushies lie through their teeth on the economy, but so do Kerry's people. Bush AND Kerry are both bought and in the pocket of the people calling the shots on illegal immigration, shifting American industry overseas, and calling a 450 billion deficit and a 550 billion trade deficit "healthy".

Posted by: Cedarford on October 4, 2004 06:17 PM

Cedarford, Where did you get your MBA from? I am sure that you had lots of republican profs............NOT

Posted by: Gman on October 5, 2004 06:56 PM

HT,
George Bush has gambled his political life time and again, on the GWOT, the Iraq invasion, elections in Afghanistan and Iraq, tax cuts in the face of falling revenues due to a collapsing economy and massive new outlays to fund Homeland Security, Medicare prescription drug benefits and educational benefits. I doubt that he views the September jobs report timing vis-a-vis the debate schedule to be any more of a gamble than the aforementioned.

Posted by: Mark in Mexico on October 5, 2004 10:49 PM