Why U.S. Job Gains Are So Hard to Count During Covid-19

[mahatmakanejeeves]

During the Covid-19 pandemic, economists’ estimates for job growth have often been off by hundreds of thousands of jobs

No paywall

Link to tweet

ECONOMY

Why U.S. Job Gains Are So Hard to Count During Covid-19

Government gets less data from employers, and economists have a hard time understanding how the pandemic affects consumer, business behavior

By Josh Mitchell, Anthony DeBarros and Andrew Barnett
https://twitter.com/JMitchellWSJ
[e-mail]
https://twitter.com/anthonydb
[e-mail]
https://twitter.com/andos234
[e-mail]
Dec. 13, 2021 5:30 am ET

The monthly U.S. jobs report moves trillions of dollars in market trades and influences key policy decisions such as the Federal Reserve’s interest-rate plans.

But during the Covid-19 pandemic, economists have had an especially hard time predicting the report’s headline number of jobs added. Meanwhile, the government itself has routinely made big revisions to its initial estimates.

Why? Two big reasons. Economists have struggled to guess the behavior of consumers and companies during unprecedented government stimulus, labor-market shifts and virus fears. Second, the government has seen a sharp decline in the payroll data it collects from employers. During one of the most volatile periods in recent memory, private and public-sector economists have a less firm grasp of what the labor market is doing.

During the pandemic, economists’ estimates for job growth have often been off by hundreds of thousands of jobs. So far this year, for instance, economists’ estimates have cumulatively surpassed the government’s initial reports by about 1.3 million jobs.

In the days leading to the report on November payrolls, economists surveyed by The Wall Street Journal believed employers added 573,000 jobs that month. The Bureau of Labor Statistics said the actual number was 210,000, and it added 82,000 more jobs to its initial October payrolls estimate for a new total of 546,000.

{snip}

The BLS reported that retailers cut 20,400 jobs in November, after accounting for seasonal factors. Without adjustments, the industry added 331,600 jobs.

Seasonal effects also caused November’s overall employment figure to look weak. Without adjustments, the economy added 778,000 jobs, the largest non-seasonally adjusted gain in any November on records dating from 1939.

“The evolution of the structure of the economy has accelerated because of the pandemic,” {Stephen Stanley, chief economist at analytics firm Amherst Pierpont} said. He believes part of the problem is the labor shortage, which has prevented many businesses from hiring in months that typically include big job gains.

Write to Josh Mitchell at [e-mail] and Anthony DeBarros at [e-mail]