Friends Don't Let Friends Put Too Much Stock in Initial BLS Estimates

A blog about business and economics.
Oct. 8 2012 10:35 AM

Friends Don't Let Friends Put Too Much Stock in Initial BLS Estimates

1349706893332

Timothy Ni, a research assistant at the San Francisco Federal Reserve, was kind enough to share with me this data he assembled from ALFRED showing the difference over the years between the Bureau of Labor Statistics' initial reporting of monthly jobs gains and its final estimate.

As you can see, though the average error is small, the scale of the revisions on a month-to-month basis is extremely large. What's more is that it's been large for a long time. There's no new problem with the data but little evidence of progress being made on estimating job growth more precisely. Which means, basically, that the monthly initial estimates that make so much news are actually an incredibly poor guide to understanding what's going on in the world. For a lot of data series, the agencies responsible for tracking the indicator in question (be it the BLS, the Commerce Department, the Census Bureau or what have you) don't even try to give these quasi-real-time numbers. If the BLS simply said, "We can't do the data accurately enough that quickly" and did everything on a one-month delay, we'd probably get better initial estimates. But people want to know what's going on as soon as possible. That's a very understandable impulse, and it's nice for the world that the BLS hustles and tries to indulge that impulse. But people ought to understand that the initial estimate is quite rough and ready. In any given month it's the revision to past data that provides the most information.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.

Doublex

It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

Politico Wonders Why Gabby Giffords Is So “Ruthless” on Gun Control

Behold
Sept. 23 2014 4:45 PM An Up-Close Look at the U.S.–Mexico Border
  News & Politics
Foreigners
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
  Life
Outward
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
  Arts
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
  Technology
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Science
Sept. 23 2014 4:33 PM Who Deserves Those 4 Inches of Airplane Seat Space? An investigation into the economics of reclining.
  Sports
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?