Bad feelings grow about employment report
When the Labor Department released its employment figures for January 2009, it subtracted an astounding 356,000 jobs from the overall count because it felt that small companies were quietly going out of business.
It couldn’t prove this was really happening.
But the department’s computers made that adjustment anyway — and much more optimistic ones over the 11 other months of 2009 — because something called the birth/death model instructed them to do so.
The model is a guess — and a bad one, it turns out — at how many companies too small to be reached in the official monthly survey are creating jobs (the “birth” part) or eliminating them (”death”).
Prepare yourself. It’s déjà vu time.
Just like it did last January, the Labor Department will be making pessimistic assumptions in tomorrow’s employment report.
Worse, it will also be correcting some of the errors this adjustment made in the past, resulting in an even gloomier job picture (if you can believe it) for the last year.
The Obama administration isn’t supposed to have the January figures yet. So it must just be an incredible coincidence that the president began his full-court press for a jobs program last week.
The 356,000 downward adjustment for the birth/death model contributed to Jan. 2009’s overall employment figure being frighteningly bad — the loss of 741,000 jobs for that month.
And that started a string of monthly job losses — 681,000 in February, 652,000 in March, 519,000 in April, etc. — that turned 2009 into one of the most dreadful labor markets of all time.
I warned readers the day before last January’s jobs report that the figures were likely to be worse than anyone expected. That column was headlined: Why You Will See Huge Drop in January Jobs (2/5/09).
Consider yourself warned again.
(Excerpt) Read more at nypost.com …
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