Jack Dunn - Reclaiming Common Sense

This week was a seriously strong week for economic data. Last week we received the Gross Domestic Product data for the second quarter. There were so many revisions to the data that the GDP report required a second article to be written this week. This past week was "Jobs Week" with the release of the ADP Payroll Report, the Weekly Unemployment Claims report, and the July Employment Situation Report. The Devil is in the Data. The Devil is in the Data Revisions.


(July 30) The article "July ADP Payroll Forecast: Up times Ten" projected a strong report with payroll growth in all private sector categories except possibly Information technology. 


(July 31) The ADP report is released the Wednesday prior to the Friday Employment Situation Report. The article "July Jobs Report Forecast: Fireworks"  saw the potential for a huge drop in Government jobs, non-seasonally adjusted, as well as a huge drop in Education and Health Services Jobs. Even so there was the potential for a big jobs report number for the private sector. The warning was watch the revisions. Upward revisions to the May and June data of 25,000 workers would "borrow" growth from July.


(July 31) The GDP data from 1929 through the first quarter of 2018 of 2018 were revised with the release of the Advance Second Quarter 2018 GDP report. "Grossly Revised Gross Domestic Product" examined the overall changes between 2005 and 2018. According to the revised data. The revisions to the data mean that the Great Recession didn't begin when we thought it did, it wasn't as deep as we thought, the final year under former President Obama was better than we first thought, and the first year under President Trump was not as good as we thought. Hmm.


(Aug 1)  The ADP Report was released Wednesday. "July ADP: Strong Growth, Solid Revisions" reported that we saw one of our best June to July growth rates and a July annual growth rate greater than July 2016 and July 2017. May and June had the goods producing jobs revised lower and the service sector jobs revised higher than last reported. IT was week, as was expected. It was the one sector that was thought could have growth or contraction year to year. It was better than last month, worse than last year.


(Aug 2) You would be hard pressed to find any television news source that gives you weekly updates on the unemployment claims data. Down was up this week. The first-time unemployment claims, non-seasonally adjusted, was under 200,000 claims, again. Yes, again.  This week we received the first-time claims data for the fourth week of July. "Historic Weekly Unemployment Claims Data" details how with over 141 million covered insured we have fewer non-seasonally adjusted first-time claims than any time since the program was created when there were 53 million or fewer covered insured.


(Aug 3) This was a solid jobs report. The media latched onto the headline non-farm payroll (NFP) number as being a disappointment. Remember that the NFP data includes government jobs and that a over 5% drop in NSA Government sector workers was anticipated. The upward revisions to the April and May data meant that 50,000 more workers were added to the economy than were reported in the main headline number. Did we add 80,000 NSA CES Private Sector workers or 125,000. Should that number have been reported at 170,000 or 215,000, or 224,000? Unemployment dropped to a level not seen since July 2000. "July Jobs Report Better than July 2017" digs into the data and the revision.


(Aug 3) The media has suddenly decided to start focusing on the wage section of the Jobs report. The thing is that they are reading the report and not examining the data. To understand the impacts of wage growth and worker growth the non-seasonally adjusted weekly wage data has to be examined by sector. The worker data has to be examined by sector. There are three sectors that are still in recovery mode from the Great Recession: Information Technology, Construction, and Manufacturing. "Wages and Workers Did Well during July" details how every sector received higher weekly wages this year than during July 2017. 


The data that we received was received rather tepidly. The revisions to the data were virtually ignored.  The predecessor to this site, "Reclaiming Common Sense," published an article during 2015 titled "Ginning Up the Jobs Numbers: Robbing March to Pay April and May" that detailed how downward revisions to the March data allowed a "consecutive months of 200,000 jobs creates streak" to be maintained. The problem is that the revision brought the three month average for March, April, and May dropped to, or below, 195,000 SA Private Sector Workers gained. The three month average for the private sector seasonally adjusted worker number has been 196,000, 223,000 and 221,000. Will next month bring more upward revisions? Time will tell. More articles on the July Jobs Report are forthcoming.


It's the Economy.