Once a month the Bureau of Labor Statistics issues their widely anticipated report on employment, and the headline number captures the attention of commentators. While many talking heads are analyzing the data, the only one thing we know for sure about every month’s unemployment report is that the numbers will change.
June numbers will be revised for the next two months. They will also be revised in an annual review and sometimes even later than that. The revisions are usually small, but when there more than 130 million people employed in the US economy a change of only 0.1 percent is 130,000 jobs, more than have been created in most months.
On average, for the past 10 years, the initial report gets revised lower by about 0.17 percent. That means the unemployment rate should be higher than first reported and the number of people employed should be lower by about 220,000, on average. Cynics won’t be surprised by this news, but many will be surprised to learn that undercounting the unemployed is a bipartisan effort.
The government changed its reporting methodology over several years spanning the Clinton-Bush years, and since early 2001, we have seen revisions that usually reduce the number of jobs.
There have been a few times since then when the initial report undercounted jobs. Those have been times when the economy was adding jobs and the statisticians seem unable to keep up.
Unfortunately, this isn’t one of those times. The May number was revised down by 29,000 jobs. When he trend in revisions is up, we’ll have a sign that the trend in unemployment truly has changed for the better.
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