Absurdly Large Outlier In The History of BLS Revisions

I hate to be a blogger that just posts other blog posts but Barry Ritholtz's morning post really needs to be widely distributed. Click all images for larger versions.

The Big Picture: Abusrdly Large Outlier In The History Of BLS Revisons:

Yes, we know that 51k new jobs stink; No, it was not a "perfect number" (Attention Mark Zandi: please lay off the Psilocybin before airtime).

Notable beneath the awful headline was the even more astounding adjustment: Payrolls for the 12 months ended in March 2006 will be revised higher by 810,000

Thanks to this adjustment, the BLS now claims that job growth during the 12 months ended in March 2006 was 45 percent higher than previously reported. The revision magically adds payroll employment growth between March 2005 and March 2006 up by a 67,500 per month.

This was the biggest revision since the Labor Department started benchmarking in 1991. To make a comparison, "the aggregate benchmark revisions dating back to 1996 added a whopping 1,555K jobs to the economy, 810K of which (52%) were added during April 2005-March 2006!"

Reuters noted that: "The historical average for the benchmark revision over the prior 10 years has been plus or minus two-tenths of one percent...BLS currently is researching possible sources for this larger-than normal expected revision."

This benchmarking is 100% larger than the largest prior numerical revision, and 50% larger than the prior percentage revision:

The ironic thing is that even after this revision, this still remains the worst job creation cycle in the post WWII era . . .

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I need to do some more research into how credible (or INcredible) this revision is. But at first blush, it is an absurdly large outlier relative to prior benchmarking in BLS revisions . . .

I'm guessing that the Rovian cadres have finally penetrated and compromised the inner circle of the professional statisticians at the Bureau of Labor Statistics. But we won't know for sure until after 2008.

One more thing on jobs courtesy of the incomparable Ritholtz via the NYT from a few months agao is this anlysis of the demographics of job growth in the last 6 years compared to the period 1966-2000.



It is kind of a tricky graph. Obviously in the 1966-2000 period one sees a lot of women entering the workforce. But the right hand column showing change in the last six years shows that the few jobs that are being created are on the older end of the specrum. The formerly retired set returning to low-wage jobs to supplement their meager pensions. This probably also accounts for the increase in unemployment among the younger brackets as the percieved-to-be more reliable older set displace youth in these jobs.