It's important to remember that both surveys [the establishment survey and household survey] are subject to error and, because of its much smaller sample size, the household survey can be subject to particularly sizeable swings. Specifically, the standard error of the household survey's monthly change in employment is 436,000(!). Based on the most extreme assumptions about flows in and out of unemployment and in and out of the labor force, understating or overstating actual employment by 436,000 would imply a measured unemployment rate ranging from 7.5 percent to 8.1 percent.
Saturday, October 13, 2012
Yikes, Atlanta Fed: Standard Error for Jobs Number is 436,000!
Dave Altig, executive vice president and research director at the Atlanta Fed, writes: