The Bureau of Labor Statistics overestimated the number of jobs added nationwide from March through June by roughly 10,600%, the Federal Reserve Bank of Philadelphia reported Tuesday.
The U.S. added just 10,500 net new jobs in the second quarter of 2022, a far cry from the 1,121,500 estimated by the Bureau of Labor Statistics’ (BLS) monthly report on state-level data known as the Current Employment Situation (CES), according to the Philadelphia Fed. By using more comprehensive data from the BLS Quarterly Census of Employment and Wages (QCEW), which samples roughly 11 million businesses compared to the 670,000 measured by the monthly CES, the Philadelphia Fed is able to make revisions to initial employment estimates, the regional bank reported.
“The large revisions occur primarily because the preliminary state estimates are based on a small sample of firms, while subsequent benchmark revisions incorporate other BLS data based on a full count from nearly all firms,” Paul Flora, Manager of Regional Economic Analysis at the Philadelphia Fed, argues in a report explaining the bank’s methodology. “Moreover, the BLS issues its benchmark revisions for state employment estimates just once a year. However, the full count of data is issued quarterly, which offers an opportunity for researchers to create their own early benchmarks on a timelier basis.”
The Philadelphia Fed’s Nov. 8 report revising estimates for the first quarter of 2022, measured from December 2021 through March 2022, found that the BLS had slightly underestimated job growth in that time period. The regional bank found that the U.S. added 1,695,800 in the first quarter, compared to the 1,614,800 as estimated by the BLS.
The strength of the labor market has been a hot-button issue, having been touted by politicians and pundits alike throughout the year as a justification for why the U.S. was not in a recession. Federal Reserve Chair Jerome Powell, as recently as Dec. 14, described the labor market as “extremely tight,” warning Americans that unemployment will likely increase as the Fed hikes interest rates to blunt inflation.
“It does seem like some of this year’s growth was ‘front loaded,’”” due to “abnormally large” seasonal adjustments to BLS data, Heritage Foundation economist E.J. Antoni told the Daily Caller News Foundation. “There certainly seem to be more indicators of stagnation than robust growth.”
Neither the BLS nor the Federal Reserve Bank of Philadelphia immediately responded to a DCNF request for comment.
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