TrimTabs Says BLS Employment Estimates Lag Real-Time Economic Data
Sausalito, CA — October 31, 2012 — TrimTabs Investment Research estimates the U.S. economy added 140,000 jobs in October, down from its estimates of 210,000 new jobs in September and 185,000 jobs in August. Meanwhile, TrimTabs expects the U.S. Bureau of Labor Statistics (BLS) to report that job growth improved in October compared to its estimate of 114,000 new jobs created in September.
TrimTabs’ employment estimates are based on an analysis of real-time daily income tax deposits to the U.S. Treasury from all salaried U.S. employees. They are historically more accurate than initial estimates from the BLS.
“We believe the BLS’ survey methodology missed the job-growth pop in August and September,” said Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “Worse still, the BLS’ October estimate will likely miss the current slowdown in economic growth.”
TrimTabs says that from June through September, it observed a four-month acceleration in year-over-year growth in real-time daily income tax withholdings. The company attributed the acceleration to an increase in economic activity in interest-rate-sensitive sectors such as housing, mortgage refinancing, and automotive. The increase in economic activity, in turn, led to an increase in jobs. TrimTabs reports that growth has slowed since the beginning of October, suggesting the summer economic growth drivers were seasonal.
In a research report, TrimTabs says recent real-time income tax withholding data show evidence of a slowdown in job growth. Specifically, in the past four weeks, growth in withholdings slowed to 3.4% y-o-y, down from 5.1% y-o-y in September and 4.6% y-o-y in Q3 2012. Assuming October inflation is 2.0% y-o-y, real growth in the past four weeks was only 1.4% y-o-y, down from 3.1% y-o-y September.
“Our real-time data is now showing a deceleration in job growth following a temporary jump in growth this past summer” said Schnapp. “In our opinion, the current slowdown is due to uncertainty surrounding massive tax increases, expiring stimulus measures, and possible budget cuts scheduled to hit the economy January 1.”
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TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity—including mutual fund flows and exchange-traded fund flows—as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit www.TrimTabs.com.
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