Maybe the economy is a little better than we thought. This week the U.S. Bureau of Labor Statistics released information that showed private-sector employment in the U.S. was likely 453,000 jobs higher in March than previously had been reported by the agency. In short, the economy is nearly one-half million private-sector jobs better than previously thought.
So, how did this happen? The answer is a technical (and not all that exciting) one. Generally on the first Friday of each month, the BLS reports the number of new jobs added in the economy the previous month. In an economy the size of the U.S. economy though, it is impossible for the government to conduct a complete count of all the jobs in the economy each month. Consequently, they sample a large number of employers instead to produce employment estimates for the entire economy. But these are only estimates.
Each year, in an effort to ensure that the monthly employment estimates are close to reality, the BLS uses more detailed data — state unemployment insurance tax records — to adjust its estimates. While these adjustments are made each year with the January employment report, this last week the BLS released a preliminary estimate of what that adjustment will be next January (based on detailed state data from March). Based on the data it appears the BLS previously underestimated private-sector employment by 453,000 jobs.
While the announcement was made with little fanfare (in fact few people other than economists knew of it at all), it is significant. The BLS previously had estimated that the U.S. economy had added 4.6 million private-sector jobs since February 2010 when the economy bottomed out from the Great Recession. Instead, if the adjustment holds, the total rises to nearly 5.1 million jobs. Furthermore, in 2011 the economy would have posted the largest one-year gain in private-sector employment since the Internet boom days of 1999.
In short, the adjustment strengthens the Obama Administration argument that the economy continues to grow and strengthen.
In the end, this week’s announcement will have little political impact because so few people know about it. But for economists, the information does begin to answer some questions. While economic experience does indicate that recoveries from financial crises, like the one we saw in 2008, tend to be agonizingly slow, other economic indicators did not seem consistent with the pace of job growth. This is likely why — the previous estimates of job growth were too low.
Of course, this does not mean that the economy is in great shape. While this new information is undoubtedly good news, the fact that unemployment remains too high is undoubtedly bad news. While the economy is doing better than we previously thought, it’s still not doing well enough. Then again, realizing that the economy created an additional half-million private-sector jobs still counts as a good day.
MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.