Losing 533,000 jobs is really really awful. The economy is in a free fall. Unfortunately, the situation is probably even worse than the data now show.
The reason is that the Bureau of Labor Statistics (BLS) imputes jobs into its survey for new firms that could not included in its sample. This imputation is based on its "birth/death" model which is inevitably backward looking. As a result, it misses turning points, underestimating job growth when the economy speeds up and overestimating job growth (or underestimating job loss) when the economy slows.
The BLS imputed 143,000 jobs into the establishment data over the last three months based on its birth/death model. In the three months from September to November of last year BLS imputed just 117,000 jobs into the establishment data.
It is inconceivable that job growth in new firms over the last three months was larger this year than in the same months of 2007. When BLS revises these data based next summer based on data from unemployment insurance records, it is virtually certain that November will show even more job loss than was reported today.
In short, as bad as the picture looks now, the reality is almost certainly worse. (Btw, reporters who cover the employment data should know about the birth/death imputations.)
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