by Calculated Risk on 3/02/2008 11:31:00 AM

Gretchen Morgenson at the NY Times provides us with some employment data from TrimTabs: The Buck Has Stopped

TRIMTABS, which estimates employment growth using data from an online job index and an analysis of income tax withheld versus job creation rates, has been far more accurate than the Bureau of Labor Statistics. For example, in 2006, the government’s initial estimates of employment growth came in at 1.52 million jobs. But the bureau revised that data upward in February 2007, for a total of 2.24 million.

By comparison, TrimTabs’ estimates of 2006 employment growth, using real-time data, totaled 2.39 million jobs. The firm reported those figures to clients contemporaneously.

Last week, TrimTabs told clients it estimated that 77,000 jobs would be lost in February; Wall Street economists are calling for a gain of 30,000 for the month.

Since October 2007, TrimTabs estimates, the economy has lost about 175,000 jobs, the first sustained employment drop since early 2003.

I don't know about the accuracy of the real time TrimTab estimates, but this reminds us that the BLS methodology is subject to signficant revisions (that might be lagged by a year), and that the BLS will almost certainly miss any turning point.

The BLS had acknowledged this weakness:

The most significant potential drawback ... is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend.

This is something to think about for those that argue - because the BLS employment numbers haen't been consistently negative - the economy isn't in recession yet. Just wait for the revisions.

And on recessions, the NY Times reports in "A Rerun, Maybe, but of What Show?" that Citigroup's Tobias Levkovich and Byron Wien of Pequot Capital are also predicting a recession. Welcome to the dark side.