Tomorrow the BLS releases its January Jobs report, but in addition to that, the bureau will release its annual benchmark revisions.
As such, notes Societe Generale’s Brian Jones, we could see a big drop in the headline number going back through all of last year.
The new benchmarking could hit the headline payroll number in 3 ways, according to SocGen:
- The universe count, or number of people eligible for unemployment insurance, is likely to be lowered.
- Alteration in the birth/death model, the result of which will be a lowering of the amount of people eligible for unemployment insurance.
- A full seasonal adjustment for the last 5 years. This isn’t likely to do much.
These adjustments will increase the potential for the unemployment headline percentage number to come in lower than expected, as the universal number declines.
While changes in statistics have a part to play, what is more exciting those projecting a lower unemployment rates is that income taxes withheld have surged, without really seeing a commensurate decrease in the unemployment number. And, as SocGen’s Brian Jones put it, “no one pays taxes on money they did not earn.”
Photo: Societe Generale