A popular meme in the wake of Friday's jobs report seen at many media outlets is that August's reported job growth of 173,000 seasonally adjusted jobs is a virtual lock to be revised up by 50,000, or 78,000, or perhaps even more, since such revisions during the past three years have been unusually large.
Well, since they opened that can of worms, let me make clear to everyone that even if those revisions materialize, August will still have been a singularly unimpressive month.
At the Associated Press late Friday afternoon, Christopher Rugaber wrote that "August's jobs totals are typically revised much higher in later months, because of the difficulties in adjusting the data for the end of millions of summer jobs."
On Saturday, the AP's Josh Boak wrote: "... economists say seasonal adjustment quirks could cause the August jobs figure of 173,000 to be revised up by 50,000 or more."
At the Fiscal Times web site, Rob Garver quoted an economist who thinks that significant upward revisions are a lock:
Indeed, PNC chief Economist Stuart Hoffman noted: “[T]he August preliminary payroll jobs number is notorious for understating the final revised data by a huge average of 78,000 jobs in the past three years, so there will be upward revisions to the 173,000 gain in the next two months.”
Okay, but upward adjustments of 50,000 or even 100,000 are not going to be enough to make August look good in comparison to the past several years (and remember, all of this has been occurring during a slow-motion "recovery" which is impressing very few everyday Americans).
The following charts show the raw (i.e., not seasonally adjusted) job additions during the past five-plus years, both overall and in the private sector:
Even if actual nonfarm payroll job additions get revised up to either 308,000 (258K + 50K) or 358,000 (258K + 100K), that performance will still be the worst August in four years. The August seasonally adjusted figure might go as high as about 250,000 from its current 173,000, but that won't change the fact that what happened on the ground wasn't impressive at all compared to previous years.
Even if actual private sector payroll job additions get revised up to either 121,000 (71K + 50K) or 171,000 (71K + 100K), that performance will still be worse than every August from 2010 to 2014. The private sector's seasonally adjusted figure might go as high as about 220,000 from its current 140,000, but that won't change the fact that what happened on the ground was the worst performance in six years.
As I noted at my home blog on Friday after the job report's release:
... the seasonally adjusted results (+173K overall and +140K for the private sector) both look overstated by 50K-75K. How convenient that Team Obama catches a (manipulated?) “break” just before the Labor Day weekend.
Because of the strangely high seasonally adjusted results, if the revisions commentators seem to take as a given really materialize, the press will be celebrating how August was another strong or even very strong month.
That won't really be the case unless the upward revisions reach well past six figures, at which point we should probably start asking, "What's the point of paying attention to the initial jobs reports?
Cross-posted at BizzyBlog.com.
