The Economic Year in Review is a Review of the Revisions
Virtually every piece of data that is published, other than the workforce population data, has a seasonally adjusted component and anon-seasonally adjusted component. Virtually every piece of data has an "advance value," a "preliminary value" and a "final value." That value is rarely the final value because there are annual revisions to the prior data. This year was no different.
The first major revision was the Current Employment Statistics data. This column exerts considerable effort and time to maintain the current data and comment upon the revisions to the data when the preliminary and final data are released. This column was delayed when the January Jobs report was released because there were significant revisions to the Current Employment Statistics data. There were 452,000 workers that were shifted from January 2018 to 2016 and 2017. This shift changed the rate of growth for 2016 and 2017. Instead of showing an improving economy from the beginning of 2017, the annual worker growth rate was revised to show a decline from 1.79% to 1.71%. This column had produced an article that was discussing a 2% tipping point. This is important because the December 2018 Jobs Report reported an annual non-seasonally adjusted (NSA) Current Employment Statistics (CES) Private Sector data eclipsed 2.00 for the first time since April 2016 this past December.
The second major revision was the ADP Payroll data. The January ADP report was released two days prior to the January "Jobs Report." This meant that the growth current year growth, seasonally adjusted (SA,) was significantly different than the SA CES growth rate. The ADP was significantly revised with the release of the February ADP report. The January SA ADP growth rate was 2.27% before the revisions and 1.80% after the revisions. Most people ignore the situation that ADP is a seasonally adjusted private sector jobs number and the headline CES Non-farm Payroll (NFP) data is a seasonally adjusted worker number. This NFP data includes government workers. The ADP data does not include government payroll positions.A better comparison for the ADP number is the SA CES Private Sector data.
Another major revision was the Monthly Retail data.The data discussed is the current month advance value. This year there was an odd revision to the data.There was a "one for one" swap of "Electronics and Appliance Sales" for "Sporting Goods , Hobbies, Books and Music" recorded during June 2018. Electronics and Appliance (E/A) sales, as one sector, had been suffering. This is not referenced in the mainstream media. This revision helped bolster the E/A data.It is important to note that he MARTS retail data is published on the Census website and that the Census website is not being updated due to the Government Shutdown. All indications are that we had a record December to finish a record year.
We also saw an epic revision to the Gross Domestic Product data back to 1929. Sometimes the data is revised back one year. Sometimes it is revised back five years. This GDP revision went back to 1929. The article "Grossly Revised GDP" detailed how annualized growth in excess of 3.0% for President Trump during the third and fourth quarter of 2017 and the first quarter of 2018 were revised to being under 3.0%. It is easier to revise the data than it is to revise the narrative. The narrative was that we would not see sustained 3% annual growth, per former President Obama. Ironically the revisions to the data gave President Trump is first four percent GDP number. It is important to note that the Bureau of Economic Analysis website is not being revised. Will there be a Fourth Quarter GDP report athe end of the month?
The "final" data to be revised was the Current Population Survey (CPS) data. This was interesting because the data that was revised was the SA CPS data. The NSA CPS data was not revised. The revisions were to the SA Full-time jobs data, the SA part-time jobs data, and the SA U-3 unemployed worker data. These changes changed the SA Unemployment rate data back to 2011 and the SA Participation rate data back to 2011. It also impacted the SA Multiple Job Holder Data. The net-net of these revisions were that the participation rate was revised higher during 2011-2016 and that the unemployment rate was reduced 2011 through 2013. (These revisions were to the November data. All of the data was revised.) Why would the participation rate be improved 2011 through 2016? The Household Data, CPS SA, was revised back to 2014, according to the Jobs Report. Legacy matters. Will the CES, or Establishment data, go through another revision this year?
There are many reasons for the advance, preliminary, and final data sets. People are on vacation. People receive better data. People are involved with the Government Shutdown. Last month we did not receive the November New Home Sales data because the census website was (is) shutdown. This means that we most likely will not receive a new home construction report for December from the Census. It has already been noted that the MARTS retail report will be delayed due to the Shutdown and the GDP report will be delayed due to the shutdown. Data is date dependent. If data comes in after the advance data collection date it is pushed to the preliminary report.
We have had a very strong Jobs year, and it would have been stronger without the revisions to the data to 2016 and 2017. We are on pace for a record retail sales year, eclipsing $6 trillion for the first time. New Home sales were on track for the best year since 2008. New Home Construction was having its best year since 2008, through November.
The data matters. The Jobs Report data for December pushed the market up last Friday. The Federal Reserve is supposedly going to be "data dependent." There are ways to get private data to substitute for public data. The best way to get it is to receive it from the Government. If you want this column to publish articles on the data I recommend that you contact your Senators and your member of the House.
It's the Economy.
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