NEW NUMBERS ARE BRIGHTENING THE EMPLOYMENT OUTLOOK
One of the most distressing and curious aspects of the current recovery has been the lack of job growth. Since the recession ended, for example, the economy has generated less than a million jobs, compared with an average of about 8 million in the first two years of prior recoveries. This lackluster record seems particularly puzzling in light of the economy's surge in the second half of last year, when much of the growth was attributed to a surprisingly large increase in productivity.
One possible explanation of the seeming lack of job creation, says economist Mark Zandi of Regional Financial Associates Inc., is that the government's monthly employment reports have been understating job gains. And in his reading of the statistical tea leaves, there's a strong chance that the Bureau of Labor Statistics will significantly raise its employment estimates for the past year when it issues its annual benchmark revision of payroll employment in June.
The reason is a recent revision of state payroll employment estimates released by the BLS. During the year, the BLS' individual state offices issue their own monthly payroll employment numbers, which don't always jibe with the national total even though they are drawn from the same survey data. Eventually, however, both the state and national numbers are revised to reflect more comprehensive data based on payroll tax records. This has now been done for the state numbers, notes Zandi, and the result is that the aggregate state estimates, which had been running below the national numbers, are now appreciably above them (chart).
Since June's benchmark revision of the national numbers will bring them into line with the state counts, Zandi expects job growth for 1992 to be raised by 300,000 jobs. And if the January, 1993, estimate is added to the tally, he says, "the upward revision could exceed 650,000--raising 12-month job growth through January from 0.7% to over 1%.
None of this means that labor market conditions are good. "A higher employment trajectory helps explain the economy's strength in the second half of the year," says Zandi, "but expected revisions will still leave job gains far below their normal cyclical increase." Although the state numbers suggest that hiring is picking up some steam, he sees "few signs yet" that it will regain its traditional vigor anytime soon.GENE KORETZ