SPXV - Is Employment Growth (A Lot) Lower Than We Think?
Editor's note: This article was originally published on January 11, 2020, by Menzie Chinn here.
Yesterday's employment release indicated a deceleration in nonfarm payroll ((NFP)) employment growth. Data from other sources suggests that the deceleration over the last year is more marked than indicated by the establishment survey.
First, consider the deceleration relative to 2017-18 (stochastic) trend, in Figure 1.
Figure 1: Nonfarm payroll employment (bold blue), stochastic trend for NFP over 2017-18 (red line), Quarterly Census of Employment and Wages (QCEW) (bold brown), and QCEW adjusted using Census X-13/log transform w/Census X-11 ARIMA