In an article discussing how the housing downturn and credit crunch has affected the economy, the NYT compared the127,000 rate of monthly job growth to the 186,000 rate over the prior year. This comparison may understate the falloff in job growth. Job growth numbers through March of this year were revised in accordance with data from state unemployment insurance records. This lead to a downward revision of 300,000 for the prior year, an average of 25,000 a month. Currently, the Labor Department has been adding approximately the same number of jobs to the estimates from its establishment survey this year through its "birth/death" model as it did last year. This imputation is supposed to pick up the jobs created in new firms that could not be included in the survey. If the economy is growing at the same rate as it did last year, then the Labor Department is probably still overstating job growth in the period since March of this year by about 25,000 a month. If the economy has slowed from its rate of growth in the same months of 2006, then the overstatement would be even larger.
--Dean Baker
