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Friday, November 7, 2008

Birth Death Model Overstates Employment... Again

The Birth Death Model once again overstates employment. In other words, things are a lot worse than the 6.5% rate presented to us. Per The Big Picture:

Since 2003, the B/D adjustment has been part and parcel to BLS' Current Employment Statistics (CES) program, the official measure of US employment. In brief, the Birth Death adjustment imagines (hypothesizes) how many jobs were created by companies too new and/or too small to participate or be found by CES. The model attempts to create what is perceived as a BLS error at the start of any recovery, when many new jobs are created but missed by BLS.
Does anyone think small businesses have really added 50,000 jobs to the financial sector over the past 12 months?
Source: BLS