Recent Divergence Runs The Opposite; Household Employment Gains Outpace Payroll
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The Bureau of Labor Statistics (BLS) publishes two estimates of job growth each month: one based on a survey of households and the other based on a survey of firms. The increasing disparity in recent months has created confusion over the size of job gains, as the payroll survey shows robust gains, while household employment is down one month and up the next. Some analysts and portfolio managers have used the household employment data to support their view that the economy is in recession. They're wrong.
The two surveys are not strictly comparable. But BLS publishes a household employment figure adjusted to payroll survey concepts. And, when modified, the household series shows solid gains, even outpacing the payroll's whopping increase in July.
To estimate the household employment series equivalent to the payroll series BLS removes from the initial estimate of household employment agricultural workers, unpaid family workers, paid private household workers, and workers on unpaid leave and adds multiple jobholders.
In July, the household series adjusted for payroll concepts rose 611,000, far above the published gain of 179,000 for household employment and above the 528,000 payroll gain. The series also shows that household employment rose by 131,000 in June, whereas the regular series shows a decline of 315,000. Since the start of the year, the adjusted household series has outpaced payroll jobs by 216,000.
In the end, the divergence runs the opposite, with household employment outpacing payrolls, and the jobless rate at 3.5%, a 50-year low, confirms that strength. The labor market data says the economy is not in recession.
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Joseph G. Carson
AuthorMore in Author Profile »Joseph G. Carson, Former Director of Global Economic Research, Alliance Bernstein. Joseph G. Carson joined Alliance Bernstein in 2001. He oversaw the Economic Analysis team for Alliance Bernstein Fixed Income and has primary responsibility for the economic and interest-rate analysis of the US. Previously, Carson was chief economist of the Americas for UBS Warburg, where he was primarily responsible for forecasting the US economy and interest rates. From 1996 to 1999, he was chief US economist at Deutsche Bank. While there, Carson was named to the Institutional Investor All-Star Team for Fixed Income and ranked as one of Best Analysts and Economists by The Global Investor Fixed Income Survey. He began his professional career in 1977 as a staff economist for the chief economist’s office in the US Department of Commerce, where he was designated the department’s representative at the Council on Wage and Price Stability during President Carter’s voluntary wage and price guidelines program. In 1979, Carson joined General Motors as an analyst. He held a variety of roles at GM, including chief forecaster for North America and chief analyst in charge of production recommendations for the Truck Group. From 1981 to 1986, Carson served as vice president and senior economist for the Capital Markets Economics Group at Merrill Lynch. In 1986, he joined Chemical Bank; he later became its chief economist. From 1992 to 1996, Carson served as chief economist at Dean Witter, where he sat on the investment-policy and stock-selection committees. He received his BA and MA from Youngstown State University and did his PhD coursework at George Washington University. Honorary Doctorate Degree, Business Administration Youngstown State University 2016. Location: New York.
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