Job applicants wait for the opening of a job fair held by National Career Fairs in Fort Lauderdale, Fla., Sept. 17, 2012.
The Labor Department is constantly refining its estimation of the U.S. Labor Market as new data comes in. Each month, when it releases its employment situation report, it also issues revisions of the previous two months’ jobs reports. Once a year, the Bureau of Labor Statistics also revises the total employment number, using additional data derived from unemployment insurance records that employers are required keep on record.
Today the Department announced the initial results of this yearly “benchmark revision” saying that from the period of April 2011 to March 2012, the American economy added 386,000 more jobs than we had previously thought. This is a net figure, which includes a loss of 67,000 government jobs, so the total upwards revision for private sector jobs was 453,000.
What is the effect of this news? These numbers aren’t really showing us anything about the current trajectory of the economy, since they represent job growth that occurred anywhere between six to 18 months ago. If anything, it serves to reinforce the reality that the Labor Department’s monthly estimate of job growth is very imprecise. Each month, when the BLS releases its approximation of job growth, the margin of error is 100,000 — a huge number when you’re talking about an economy that has been adding roughly that number of jobs every month. For instance, when September’s report showed that the economy added 96,000 new jobs, what it was really saying was that it was 90% sure that the economy produced anywhere between a loss of 4,000 jobs and a gain of 196,000.
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What the number does do is strengthen our understanding of some of the dynamics in the economy. One puzzling aspect of Employment Situation Reports over the past year or so is that the unemployment rate has fallen disproportionately to the number of jobs added each month. This can happen because these two figures are actually derived from different sets of data, so they don’t move in tandem. While one culprit was certainly a large number of people leaving the workforce entirely, it appears now that more of it was due to actual job growth than previously thought.
Of course, many will use these new data for political purposes. One benefit for the Obama Administration — as pointed out this afternoon on CNNMoney — is that the President can now say that there are more total jobs in the American economy than the day he took office. What help this will be as President Obama tries to convince voters to return him to office for another four years is hard to say. It wasn’t fair to blame the President for the staggering job losses we were experiencing in the first months of his presidency anyway. That said, it does provide a concise and repeatable talking point — something vote-hungry pols never have enough of.
But don’t worry Romney supporters! You still have plenty of depressing statistics to lambaste the current administration with. Unemployment is still far too high, and economic growth frustratingly slow. The Commerce Department was out with a revision of its own this morning showing that the U.S. economy grew at an even more sluggish pace during the months of April, May and June than it had previously reported. GDP growth for the second quarter was revised down to 1.3% from an initially-announced 1.7%.