Why NFP is even worse than it seems

You probably know the BLS job creation estimate was negative for the first time in four years. In my on going debate* with Barry I maintain that there is nothing fishy about the way the BLS uses its Birth Death model. The error comes from the fact that the Births and Deaths are estimated by looking at how the model performed last year. When times are changing fast the BLS model is likely to miss that. It under estimated the strength of the labor market when job creation turned around in late 2002 and it is overestimating job creation now.

As I thought the June / July numbers wererevised downward. I wouldn't be surprised if July was revised downward again and if the August estimate dipped even further in coming months.

Upshot no conspiracy, no willful misreporting, but a very week labor market.



*Debate in the sense that Barry graciously takes time off from being a super blogger-pundit to answer my objections.