Recession job losses likely to be revised sharply higher
Chris Isidore, senior writer, On Tuesday October 12, 2010, 4:46 am EDT
As bad as job losses were during the recession, we're about to find out that things were even worse.
The government currently estimates that 2.2 million jobs were lost from April of 2009 through March of this year, a significant portion of the 7.8 million jobs lost since the start of 2008.
But in a little-noticed note at the bottom of September's jobs report, the Labor Department said it now appears there were 366,000 additional jobs lost during the 12 months that ended in March, a revision that is not yet included in the official numbers.
That revision isn't as bad as last year's -- when the Labor Department said that an additional 902,000 jobs were lost. But it is still the second largest downward adjustment in nearly 20 years.
The final revision won't be announced until February, but the Labor Department gives a preview in early October of what it is expecting.
This year's large revision is a sign of the difficulty the Labor Department has estimating the number of jobs lost and created during the severe economic upheaval of recent years.
"Around turning points, the revisions tend to be larger," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. "At the bottom of the cycle, they tend to underestimate the job losses."
The government's closely followed monthly jobs report is based primarily on a survey of employers. But the Labor Department has trouble estimating employees at newly opened businesses, as well as figuring out how many jobs were lost at businesses that close. So it uses a model for that part of the estimate.
During the 12-month period that ended in March, that so-called birth-death adjustment added 336,000 jobs to overall total payrolls.
The birth death adjustment also resulted in an estimated 682,000 additional jobs in the six months since March, although unlike the widely-reported monthly job readings, that gain is not seasonally adjusted. Still it is significant, accounting for more then 40% of the job gains reported since the spring.
"The birth-death model isn't working," said Robert Brusca of FAO Economics. "As businesses are having trouble getting credit, it's not surprising." |
