A half and a week earlier, Kevin Drum kept in mind earlier the disjuncture between task development as measured by the family survey (civilian work) and establishment study (nonfarm payroll employment). My conclusion was that the empirical evidence suggested putting most– if not all– weight on the facility study. Now, Torsten Slok compares the decreases in action rates in the 2 studies. The comparison further strengthens the case for using the establishment series.
A week and a half earlier, Kevin Drum kept in mind earlier the disjuncture between task development as determined by the home study (civilian employment) and establishment survey (nonfarm payroll employment). My conclusion was that the empirical proof recommended putting most– if not all– weight on the establishment study. One such example is the widening gap in between the establishment survey and the home survey in the employment report, with the establishment survey revealing 2.6 mn tasks produced over the previous 8 months and the household study showing no task growth over the exact same duration.
Figure 1: Nonfarm payroll employment official (sky blue), nonfarm payroll work implied by initial criteria (dark blue), and civilian work adapted to NFP principle (green), all seasonally adjusted, in 000s. Figures in (parentheses) are net brand-new tasks in millions, because 2022M03 (shown by red dashed line). Source: BLS via FRED, and authors calculations.
The space in numbers expands exactly at the time the household response rate drops.
So: (1) I put more weight on the establishment series, and (2) the space in between the two series is more most likely due to increasing, and biased, measurement error in the household series, rather than, for example, mainly increases in multiple-job holders
.
Slok composes:
Survey reaction rates for employment and inflation have declined substantially throughout the pandemic, and this is introducing significant measurement mistakes and uncertainty, see chart below. One such example is the widening gap in between the facility survey and the household survey in the employment report, with the facility survey revealing 2.6 mn tasks produced over the previous 8 months and the home survey revealing no job growth over the very same duration. …
Heres the figure (where Ive added a red line at March 2022, 8 months ago).
Source: T. Slok, 13 December 2022. Red line at March 2022.
Keep in mind that the family action rate relative to facility rate drops precipitously beginning around October of last year. The gap yawns more rapidly starting after March. And heres the photo of the gap in between nonfarm payroll employment and civilian work adapted to the NFP concept (this is a research series).
