Actually, The U.S. Lost 1.2 Million Jobs Last Month

Everyone (including us) is saying this morning that the U.S. economy gained 163,000 jobs last month. Strictly speaking, this is a lie.

In fact, the U.S. economy actually lost 1.2 million jobs last month. There were 134.1 million jobs in June, and 132.9 million jobs in July. (The numbers are in this PDF.)

Why the massive gap between the number everybody is reporting and the actual number?

There are huge seasonal fluctuations in employment that occur in a predictable way, year after year. Retailers staff up before Christmas, and lay people off in January. Public school districts staff up in the fall — and let people go in July, after the school year ends.

To account for this, the government releases "seasonally adjusted" jobs numbers every month. The basic idea is to correct for these predictable fluctuations.

So in months when it's typical for employers to add tons of workers, the seasonally adjusted number will be much lower than the actual number. And in months like July, when it's typical to cut tons of workers, the seasonally adjusted number will be much higher.

Fair enough.

But as the NYT's Economix blog notes, "Some economists believe economic turbulence has disrupted the calibration of those adjustments, undermining the accuracy of the bureau's estimates."

That worry is particularly relevant for months like July, where the seasonal adjustment tends to be especially large.

Over time, the monthly jobs numbers provide a solid picture of employment in America. But there are lots of reasons to be cautious about reading too much into any one month.

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