Labor Pains

The Bureau of Labor Statistics produces a monthly report which is largely based on two telephone surveys, the establishment survey and the household survey. The establishment survey covers businesses and produces an estimate of the number of jobs, which makes the headlines. The household survey produces estimates of the number of employed persons and the unemployment rate. 2022 to date has featured a record and growing discrepancy between the two reports. Of course, a discrepancy is normal as a result of individuals holding multiple jobs, but this year has been exceptional.

However, the Philly Fed produces a quarterly revision of the employment estimates based on the QCEW, the Quarterly Census of Employment and Wages which covers more than 95% of employers. The most recent revisions, for 2Q2022, revealed that headline job growth was 10,500, consistent with the household survey, rather than the 1,047,000 reported by the BLS, The discrepancy between the BLS estimates continues in the rest of the year to date so it is reasonable to assume that the job growth during that period was also a mirage.

Bullish analysts have seized upon this report to justify an early “pivot” by the Fed. This fails to be convincing because the unemployment rate and average hourly wages continue to show a very tight labor market, reported layoffs notwithstanding. What is does show is that Biden’s boast of job creation was BS, just like pretty much everything he boasts about.

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