Category Archives: Labor

A Comparison of the Net New Job Estimates of the ADP and the BLS: The Differences are Large

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Chart 1

With the government shutdown, the Bureau of Labor Statistics (BLS) is no longer issuing its often eagerly awaited monthly report on employment growth.  Institutions such as the Fed are flying blind, even though the Fed is now reducing interest rates out of concern the job market is weak.  Private markets know even less.

In the absence of the BLS reports, the reports issued by the private firm ADP (a large processor of payrolls for firms) have taken on greater importance. The ADP has long issued a report (normally two days before the BLS issues its monthly report) that provides a first look at what the employment numbers might be that month.  It is now producing these reports in a collaboration with the Digital Economy Lab of Stanford University.  ADP bases its estimates on the payrolls it processes for firms, now covering 26 million employees.  While not as large as the sample of employers who report their payrolls to the BLS each month (roughly one-third of all workers – including government employees – or around 53 million currently), those are both still huge “samples”.

But the ADP does not have the advantages the BLS has.  The BLS obtains its estimates from a stratified random sample of employers, while the ADP must base its sample on the firms that have contracted with it for payroll processing services.  While both the BLS and the ADP try to correct their samples to reflect a proper weighting of different types of firms (e.g. by size of the firm, by sector of activity and region of the country, by type of ownership, and by other factors that may be relevant), there can still be biases in the data they have to work with.  Such biases are likely significantly more of a factor for ADP.

It is also important to recognize that while the focus of the media is typically on the number of “new jobs created” in the month of the report, that is a confused term on many levels.  There is constant turnover in the job market, with workers starting new jobs and leaving old ones (mostly by resignation, but also from layoffs, retirement, and so on).  The estimates of neither the ADP nor the BLS are directly of “new jobs”.  Rather, they both estimate the total number of workers who were employed (i.e. were on the payroll) in some specific period of each month (for the BLS, for the payroll period that included the 12th day of the month).  The number of “new jobs created” is then the difference between the estimated total number of workers on a payroll in the given month less the separately estimated total number of workers on a payroll in the prior month.  This difference is thus a net figure, and is estimated by taking the difference between two total employment estimates.

Both ADP and the BLS also revise their monthly estimates each year in a rebenchmarking exercise, based on results from the Quarterly Census of Employment and Wages of the BLS.  This report is comprehensive  – a census – that provides a good count of the number of workers employed as of a given month each year (mostly from available data on who is covered by unemployment insurance).

Are the ADP monthly estimates on net employment growth then close to what the BLS estimated?  Not really.  The chart at the top of this post shows the difference between net private employment growth as estimated by ADP and as estimated for the month by the BLS.  The currently issued ADP series on private employment begins in January 2010, and hence one can find the change in employment starting in February.  The last estimate issued by the BLS before the government shutdown was for August of this year.  The BLS figures used here are its estimates for private employment (to be comparable to the ADP estimates), not the more commonly cited figures for overall employment – including government – that the BLS also provides.

I have removed from the chart the figures that would apply for the period from March 2020 to July 2020.  This was during the peak of the Covid disruptions, and the differences in the monthly net new jobs estimates were huge.  The largest was for April, where ADP estimated private employment fell by 6.1 million while the BLS estimated it fell by 19.6 million – a difference of 13.5 million.  But these were far from normal circumstances, and including these months on the chart would have distorted the scale.  They were instead set to zero.

Leaving out the March 2020 to July 2020 figures, the average absolute deviation (i.e. the average deviation regardless of whether higher or lower) was 108,000 workers.  That is, on average the ADP and BLS estimates of net new private jobs in a given month differed by 108,000.  To put this in perspective, the average monthly growth in net new jobs over this period was 152,000 in the BLS figures.  The average deviation between the ADP and BLS estimates (of 108,000) was more than two-thirds of this.

The standard deviation was 180,000, meaning that (in the long run) in two-thirds of the months the deviation can be expected to be less than that, and hence that in one-third they can be expected to be more.  These monthly differences in the employment estimates between the ADP and the BLS are large.  It would not be safe to assume the ADP figures provide a good estimate of what the BLS figures would have been.

The chart at the top of this post covers the full period from February 2010 to August 2025, a period when there were other major disruptions and not just those of the Covid period.  If one limits the analysis to the period since 2022, when growth has been relatively smooth and unemployment has been low, one has:

Chart 2

While the deviations between the two sets of estimates are less than over the full period going back to 2010 (with an average absolute deviation of 68,000 workers and a standard deviation of 99,000), the differences are still large.

It is commendable that ADP issues employment estimates based on the payroll data they have access to.  With no figures from the BLS, there is currently nothing else to go on to ascertain whether employment is growing or not.  But the ADP figures are not a terribly good approximation to what the BLS provides in its monthly net new employment estimates, and users should be aware of the often large differences.

Not a Good Jobs Report – And Firing the Messenger Will Not Help

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Update – August 5, 2025:  In the initial version of this post, I mistakenly said that businesses are required by law to participate in the Current Employment Statistics (CES) survey of the Bureau of Labor Statistics (BLS) – the survey that the BLS jobs numbers are based upon.  This is not correct.  While participation is required in certain states under state laws, there is no federal law on this.  The post below has been corrected to reflect this and has added material on the participation rates.  

On August 1, the Bureau of Labor Statistics (BLS) released its estimate of net job growth in July.  The news was not good.  Net job growth in July was just 73,000, where growth in the number of jobs in health care and social assistance alone came to 73,300.  That is, net job growth for everything else was essentially zero, indeed negative.

But more surprising and concerning than the disappointing growth in July, the updated BLS estimate of total job growth in May was reduced by 120,000 to just 5,000, while the estimate for June was reduced by 133,000 to just 14,000.  The initial job growth estimates for May and June were a healthy 139,000 and 147,000, respectively.  Now, both figures are close to nothing.

Revisions to the monthly job estimates are both automatic and routine.  The BLS always revises the estimates for the most recent two months as each new monthly report is released, as it updates its estimates based on more complete data sent to it by employers who are covered in its Current Employment Statistics (CES) survey.  The CES sample includes approximately 121,000 businesses and government agencies at approximately 631,000 individual worksites – covering a total of about one-third of all nonfarm payroll jobs.  The BLS estimates then rely on timely reporting from these employers.

Participation by employers who have agreed to take part in the survey is high.  While not mandated by federal law (although it is in certain states by state law), approximately 94 to 95% who have agreed to be part of the survey then respond by the time of the final release of the employment estimates (based on response rates over the past year).  But not all respond immediately, and some cannot.

The figures reported are of the number employed by the establishment at some point during the payroll period that covers the 12th day of each month.  These are reported along with figures on the compensation paid by the firm (in dollars) and the total hours worked (and separately the total overtime hours worked).  The firm will not know what these will be until the payroll period is over.  If the payroll period is one week, or even usually two weeks, the firm should be able to file its report (which is normally done online) in time for its data to be included in the initial estimate of employment that the BLS issues each month.  But if the payroll period is for the full month, then by definition the BLS will not have that firm’s data in time for its initial employment estimate of that month.  The BLS thus issues a revised estimate the next month, and then also the following month, as further data arrives.  This is all standard.

The BLS does, however, arrive at an estimate each month for total employment – despite still having only partial reports from its survey – by imputing values for the missing data based on past patterns and relationships.  On average those initial estimates are very good, with the later revisions sometimes higher and sometimes lower.  The average revision since 1979 has been less than 0.01% of the number employed.  In absolute value terms (i.e. in terms of just the revisions themselves, not whether they were positive or negative), the average revision was a still very small 0.05%.

The BLS thus updates its job estimates for any given month at the time of its next monthly report and then again at the time of the monthly report after that, based on the more complete reports it has received by then.  There is also an annual revision of the monthly figures, issued each January, based on updated control totals for overall employment and its composition broken down by such factors as the size of the firm, the sector, and so on.  These control totals are obtained from periodic census information.  The process followed for that annual revision was described in an August 2024 post on this blog.

All this is standard and routine, and follows a methodology that was developed years ago.  Furthermore, it is automated and done by computer, with only a cursory review of the numbers by staff at the end.  The BLS is also fully transparent on the revisions it makes.  One can find on this webpage on the BLS site all the monthly revisions (from both the initial estimate to the second, and from the second to the third), month-by-month, back to January 1979.

Trump paid no attention to this.  Faced with the reality of disappointing jobs numbers for the last several months, Trump decided that the best course of action was to shoot the messenger.  He fired the well-respected and professional head of the BLS, Dr. Erika McEntarfer, asserting (with a clear lack of understanding) that McEntarfer was somehow manipulating the numbers for political reasons.  Trump had also asserted in August 2024 that the BLS under Commissioner McEntarfer had manipulated the annual revision of the benchmark control totals released at that time (which happened also to be a downward revision).  The control totals are released every August, prior to the detailed sectoral and monthly figures then released in the coming January.  See my August 2024 blog post on that episode.

Trump also does not understand that the revisions – while significant – are far from unprecedented in size.  The chart at the top of this post shows the revisions to the monthly figures (defined as the difference between the third estimate and the first, with the sole exception for the June 2025 estimate which is between the second estimate and the first), as a share of the overall number employed in the economy.  It is shown as a share of total employment in order to make meaningful comparisons over time, as there are now 80% more employed in the US than there were in 1979.  The figures for May and June 2025 are shown in red at the far right in the chart, although the red may be hard to see.

The first thing to note from the chart is how small the revisions mostly are, especially over the last quarter century.  Unless there are major economic disruptions underway or soon to be underway (such as from the Covid crisis in 2020 and the recovery from it in 2021, from the 2008/09 Great Recession, and earlier in the years at the end of the Carter presidency and the first term of Reagan, when the economy went through two separate recessions), the range of the revisions is almost always well less than +/- 0.1% of the number employed.  This is extremely small.  Keep in mind that the BLS arrives at its estimates of total employment each month from a zero base, where it asks its (rather large) sample of business establishments how many people they currently employ.  The estimates are not based on a survey asking, for example, what the change in employment at their establishment may have been.

The May and June 2025 revisions were reductions in estimated employment of 0.075% and 0.083% of total employment, respectively.  These were major revisions, but certainly far from unprecedented.  Plotting the revisions onto a histogram with bins of 0.05%, we have:

Chart 2

The May and June revisions fit into the -0.10% to -0.05% bin.  There were a total of 37 monthly cases that fit in that group in the 558 months from January 1979 to June 2025, and there were also 27 monthly cases where the reductions were greater.  That is, revisions similar in magnitude to, or greater than, those in May and June have happened in about 11% of the monthly cases since 1979.

There is no evidence that the BLS or its head Erika McEntarfer somehow manipulated these estimates to arrive at figures that Trump did not like.  Indeed, it would probably be impossible, given how automated the process is.  That does not mean, however, that a new Trump appointee to head the BLS would not be able, over time, to redesign the process in order to give Trump something closer to the numbers he wants.  This will need to be watched closely.

Until recently, the first groups that would be advised of any changes in its methodology that the BLS was considering would have been two advisory panels of outside professionals.  The panels were made up of individuals from universities, research institutes, and private businesses, who were impartial professionals and were not paid (other than for travel expenses).  Those panels – the BLS Technical Advisory Committee and the BLS Data Users Advisory Committee – were, however, dismissed in mid-March by the then new Trump administration.

There were concerns when the panels were dissolved that the Trump administration had plans to politicize the process by which basic economic data is gathered, with the aim of ensuring only flattering figures are released.  The firing of the Commissioner of the BLS appears to be a further step in that process.

The Economic Record of Biden and Trump Compared to That of Presidents Since Truman

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A.  Introduction

The BEA released on January 30 its first estimate (what it calls its “Advance Estimate” ) of GDP in the fourth quarter of 2024.  This provides the first good estimate of GDP growth during Biden’s full term in office.  We can now see how that growth compares to growth during the terms of other US presidents, and in particular Trump.  Trump has repeatedly claimed that “we had the greatest economy in the history of the world” when he was president, while “Under Biden, the economy is in ruins”.

We now have concrete statistics on this.  Like much of Trump’s bombast, there is no truth to his claims.  This post will examine what the record has been for growth in per capita real GDP, for unemployment, and for inflation, comparing the record we now have for Trump and Biden to that of the other post-World War II presidents.

B.  Growth in Per Capita Real GDP

The chart at the top of this post shows what most take as the broadest measure of economic performance:  the growth in real GDP per capita.  The figures were calculated from BEA National Income and Product Account (NIPA) data (as updated on January 30), accessed via FRED.  They show the average rate of growth in per capita real GDP for each four-year presidential term going back to Truman’s second term (as quarterly GDP data only began to be estimated in 1947).  The presidential terms are defined from the first quarter of their inaugural year to the last full quarter of the final year of their term.

Per capita real GDP grew at an average annual rate of 2.5% under Biden, which is the highest in any presidential term since Clinton’s second term.  And it is almost twice as high as the average rate of growth of just 1.3% per year during Trump’s first term.  Compared to the 19 presidential terms since Truman, Biden would have been sixth (i.e. in the top third) while Trump would have been thirteenth (on the border of the bottom third).

Trump claims that this poor growth performance should be blamed not on him but on the onset of the Covid pandemic in 2020.  Covid would, indeed, have been difficult to manage by even the most capable of administrations.  The Trump administration was, however, certainly far from the most capable.  His mismanagement of the pandemic (including, for example, his repeated claim that it would simply “go away” on its own, his lack of leadership in not calling on his supporters to wear masks, his promotion of wacky “cures” that had no basis in actual evidence, and much more) made things far worse than they would have been.

But even if we allow Trump to claim a mulligan (as he reportedly often demands in his golf game) and leave out 2020, growth during Trump’s first three years in office would have averaged 2.2% per year – still less than what it has been under Biden.  Growth in Trump’s first three years would also have been well less than in Clinton’s second term (when per capita real GDP grew at a 3.1% rate), as well as under Reagan (both terms), Kennedy and Johnson (both terms), and Truman.  It would have been about the same as growth during Clinton’s first term, Carter’s term, and that of Nixon.  Still nothing special.

In other words, even when we leave out the chaos of 2020 during the Covid pandemic, Trump’s economic record was middling at best – with substantially slower growth than under a number of post-World War II presidents.  It was certainly far from the “greatest” in history.  And for his full term, Trump’s growth record ranks at about the bottom-third mark.

C.  Unemployment Rate

Another common measure of economic performance is the unemployment rate:

Chart 2

These figures were calculated from BLS data (via FRED), and are the simple averages of the unemployment rate over presidential terms from January of their inauguration year through to December of their final year.  (One could reasonably argue that the period should start only in February of the inauguration year and end in January, but that one month shift would not lead to a significant difference in the four-year average.  Plus, as I write this I do not yet have the unemployment statistic for January 2025.)

Unemployment under Biden has been exceptionally low, at an average of just 4.2% over his full term.  It was well below the average rate under Trump (5.0%).  Indeed, the average unemployment rate under Biden was lower than under any president since Johnson’s full term in office (1965 through 1968, when it averaged 3.9%), although the average rate in Clinton’s second term (4.4%) was not too much higher.  Over the full post-World War II period, Biden’s record on unemployment was the second-best out of the 19 presidential terms.  Trump’s record was tied with two others for the sixth through eighth ranking.

Again, if we give Trump a mulligan and count only the first three years of his term, the average unemployment rate would have been 4.0%.  Quite good, although the unemployment rate averaged an even lower 3.8% during Biden’s final three years in office.  Also, and as noted in an earlier post on this blog, the unemployment rate during Trump’s first three years in office simply reflects a continuation of the same downward trend it had been on during Obama’s presidency.  What can be said is that in his first three years in office, Trump did not wreck the path the economy was following during Obama’s second term in office (with GDP growth also similar).  The wreck then came in Trump’s fourth year.

D.  Inflation

The main criticism directed at Biden’s economic record was the increase in the rate of inflation (with data from the BLS via FRED):

Chart 3

As measured by the CPI, inflation during Biden’s term averaged 4.9% at an annual rate, the highest since Reagan.  Inflation rose sharply in much of the world following the supply and other disruptions arising from the 2020/21 Covid pandemic, with supply chain issues continuing to mid-2022.  The Russian invasion of Ukraine in February 2022 also added to price pressures as the prices of oil, natural gas, wheat, and other commodities soared for a period.  Overall consumer prices rose in the US, as they did in other developed OECD economies (and by more than in the US in most of them).

Inflation came down sharply (as well as suddenly) in the US in mid-2022 as the supply chain issues were resolved.  Since then inflation has remained above the Fed target of 2% solely because of (not just largely because of, but entirely because of) the rising cost of housing.  Rising housing prices are certainly important – and I plan to address the issue in an upcoming post on this blog – but to address inflation effectively one should be clear on the cause.  One should also recognize that the mirror image of the rising cost of housing is that homeowners are enjoying rising home values, and that two-thirds of US households own their homes.  Those two-thirds are benefiting from the rising values.

Inflation as measured by the CPI was 1.9% over Trump’s first term in office.  This was basically similar to the average rate of inflation since Clinton’s second term, although a bit below where it had been from Clinton through Obama’s first term.  And it was higher than inflation in Obama’s second term (which was arguably too low).

The Trump record on inflation was helped by especially low inflation in 2020 due to the Covid crisis.  With much of the economy shut down, the overall price index in fact fell.  This is highly unusual for the seasonally adjusted rates.  The seasonally adjusted overall CPI fell in each month from March to May, and it was not until August that it returned to where it had been in February.

Particularly noteworthy was the drop in the price of crude oil.  In terms of today’s prices (i.e. the CPI of December 2024), the price of the benchmark West Texas Intermediate crude oil fell to just $23.19 per barrel in April 2020.  This was below its inflation-adjusted price of $25.36 in July 1973 – just before the first OPEC oil price increase – and the lowest in real terms of any month since then except for the single month of November 1998 (when oil prices fell to $21.59 in a brief but intense international financial crisis following from Russia’s financial collapse that year).

A crisis – such as the one brought on by Covid in 2020 – that leads to a sharp and sudden drop in demand can certainly lead to low inflation for a period.  Prices will often then bounce back as the economy recovers.  But one should certainly not want to cause a crisis – where in 2020 the unemployment rate shot up to the highest it had been since the Great Depression of the 1930s – to keep inflation low.

E.  Conclusion

Assessing the economic performance of a presidential term by just three measures is simplistic, of course.  There is much more going on.  These are also aggregate measures, and the measures of relevance to any individual can be quite different.  Distribution matters when looking at growth in GDP per capita; the unemployment rate matters most to those who are at risk of losing their jobs; and what matters in terms of price increases will vary by person (where, for example, increases in home prices are a benefit – not a cost – to the two-thirds of US households who own their own homes).

Still, the three measures of growth in real output, of the unemployment rate, and of consumer price inflation are important and are a common focus in assessments of the economic record of a period.  They receive a good deal of attention in the press and by the public.

One can also question whether the record of any president should be measured by periods that begin and end with the inauguration date.  It can reasonably be argued that the record should begin only three months later, or six months later, or even twelve months later, as new presidential policies and management will only begin to have an influence with a lag.  While there is certainly some lag, what that lag might be is not at all clear.  Also, that lag might be different at different times and for different conditions, depending on the state of the economy when the president takes office.

Given the impossibility of determining what the appropriate lag might be, it is probably fairest to begin the measurement from the date the president takes office.  But one could argue that it should be later.

More fundamentally, some might argue that the influence a president has on economic developments is limited.  No doubt there are limitations, with many underlying economic forces that a president alone cannot affect – at least in the near term.  But while recognizing such limitations, it is too extreme then to say that a president has no influence.  Policy matters, and it is reasonable to assess a president’s success in determining the right policies, getting them passed and implemented, and then seeing the outcome.

Recognizing these limitations, it is nonetheless clear that the economic record of Biden was relatively good.  Growth was strong, unemployment was low (the lowest of any presidential term since Lyndon Johnson), and consumer price inflation – while relatively high – was largely a consequence of the post-Covid disruptions.  And inflation came down from mid-2022 to target levels or below, with the significant exception of housing.

Trump’s economic record in his first term, in contrast, was relatively poor.  It was not the worst among the post-World War II presidential terms, but in terms of growth it was around the bottom third mark.  It was around the middle if one is generous and leaves out the collapse in 2020 due to Covid.  Unemployment and inflation during his first three years in office were relatively good (although not the best compared to others).  But on each, Trump can basically be commended for not wrecking the path they were on that he had inherited from Obama.  And then 2020 came.  It was certainly not “the greatest economy in the history of the world”.

We will now see what Trump’s record will be in his second term.  Trump is now inheriting from Biden (as he had from Obama) an economy where GDP is growing at a strong rate, unemployment is extremely low, and inflation is low.  But while in his first term Trump did not – during his first three years – upset too much the strong path the economy was on, Trump is now moving much more aggressively in his second term.  As I write this, he has just issued orders that from February 4, the federal government will charge US importers additional tariffs of 25% on all imports from Canada (other than 10% on imports of oil), an additional 25% on all imports from Mexico, and an additional 10% on all imports from China (all additional to whatever the tariffs were before, which varied by item)

Such new tariffs are not just costly for the US firms and ultimately consumers who will pay them, the ones on Canada and Mexico are also in clear violation of the USMCA free trade treaty (better known as NAFTA 2.0, as it was largely the same as the original NAFTA treaty).  The first Trump administration negotiated the USMCA treaty, and Trump himself signed it together with Canada and Mexico in 2018.  While Trump is now claiming the 25% tariffs are being imposed due to some new “emergency”, that justification strains credulity.  What is happening at the border now is not fundamentally different from what was happening in 2018 when the treaty was signed.

If the tariffs are not soon lifted, they will cause significant damage to the US economy.  But this is just the start, and it looks like Trump is imposing such tariffs (including on Canada – probably the closest ally of the US – at least until now) to show no country is exempt from his attempt at bullying.

We will see what results.