Fed Fight: Biden's BLS Lashes Out At Philly Fed Over Million-Job Revision

Tyler Durden's Photo
by Tyler Durden
Monday, Dec 26, 2022 - 07:50 PM

Nearly two weeks ago the Philadelphia Federal Reserve wrote that the Biden administration had overstated US job growth by at least 1.1 million - directly implying that the Bureau of Labor Statistics (BLS) had fabricated US payroll data to provide political talking points.

The BLS had previously reported that the US economy added approximately 1,047,000 new jobs in Q2, 2022 - a figure the Biden administration used extensively to suggest they were successfully navigating the economic crisis. The Philly Fed's revision, however, indicated that the actual number of jobs added was more like 10,500. The report also suggested that the BLS had understated unemployment figures in 29 states and D.C. by 'significant margins,' which would mean Job growth was basically flat during that period.

Now, the BLS is on the war-path suggesting that the Philly Fed is using 'lower quality' data.

"BLS does not believe that the monthly CES data dramatically overestimated employment growth, though all survey data contain error and revisions are a necessary part of the statistical estimation process to ensure accuracy," a spokesperson told Just the News.

Here's where it gets spicy;

"In the past, other Regional Federal Reserve Banks have conducted similar research using various methodologies. However, BLS has determined, following years of research and engagement with the Federal Reserve Banks and data users that this general approach resulted in lower quality data."

"BLS employment data from the Current Employment Statistics (CES) survey are widely recognized as a key indicator of labor market performance, in large part because of the consistent, transparent methods used to produce timely and accurate statistics," the BLS continued. "Once a year, BLS revises the official monthly estimates by benchmarking to BLS quarterly administrative data (the Quarterly Census of Employment and Wages, or QCEW) that is available on a 5-month lag.

"Historically, CES estimates of national employment are extremely reliable; last year, which included the effects of the pandemic on labor markets, the revision was only -7,000 or less than 0.05 percent. Using a simple methodology and a series of assumptions, the Philadelphia Federal Reserve Bank benchmarked to a less complete version of the QCEW data than is available to BLS."

The BLS went on to highlight the Philadelphia Fed's own acknowledgement of the limitations of the data to which it had access. "The Philadelphia Fed research attempts to estimate the size of the benchmark for national and state employment changes from March to June 2022, which covers a slightly different time span than the BLS preliminary revisions," the bureau explained.

"Their methodology documentation includes the statement: 'Our early benchmark process does not attempt to be as comprehensive as the BLS process as we do not have access to all the data that the BLS uses.' BLS will release revised benchmarked national data on February 3, 2023, and state data on March 13, 2023." -Just the News

The Fed, meanwhile, says it uses "more comprehensive, accurate job estimates released by the BLS as part of its Quarterly Census of Employment and Wages program," vs the BLS's monthly data.

In short, the BLS will drastically revise all of its data some time in 2023 (and 2024 according to Steve Liesman) at which point nobody will care what happened in Q2, 2022.