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Job Growth Not Trending Higher

Given the consensus that U.S. growth is about to “take off” and reach “escape velocity,” many would just ignore the December payroll jobs data, expecting it to be revised away.

Yet, in the preceding 12 months the economy created 194,000 payroll jobs per month according to the establishment survey, but only 101,000 jobs per month according to the household survey, i.e., over a million fewer jobs over that 12-month period. Which is closer to the truth?

As the chart shows, over the past decade, the mean revision to the 12-month moving average of job growth, as measured by the household survey, was only one-twenty-fifth that for payroll jobs. Since their longer-term patterns tend to be similar, the payroll jobs data are more likely to be revised down.

Separately, the household survey, adjusted to the payroll concept, actually shows a decline in employment since the summer.

Bottom line: even ignoring the December jobs data, the trends are worsening, especially for data not subject to major revision.


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