Object in mirror is worse than it appears?
The Big Picture blog -- written by a chief market strategist for an institutional research firm -- has a fascinating and depressing post about how the federal government might be wildly overestimating job growth. Though the employment numbers released every month are culled from a survey, part of the reported results comes from statistical modeling to try to account for jobs in companies that are too tiny or new to be picked up by surveyors.
That might work all right in a recovery, but on the downside of an economic cycle, the "adjustment potentially will hypothesize lots of phantom job creation." And right now, a whopping 80 percent of the reported job growth is coming from that model, the blog says:
That explains the stability in construction and finance jobs in the monthly data. ... In October 2007, the BLS data on job creation has ballooned up to 80% imagined, and a mere 20% measured. That is not a formula for accuracy or precision.
To quote the poet Homer: Doh.
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