Did Government Retirements Distort January’s Economic Data by Softening the Payroll Numbers?
While last Friday’s jobs report for January had good news that unemployment declined from 10 to 9.7%, payrolls declined by 20,000, below consensus estimates that the economy would gain 15,000 jobs. 1 This raises the question of how both unemployment and the number of people with jobs can be going down at the same time. No doubt a myriad of factors are at play, but it occurred to me that one of them could be a higher than usual number of government retirements last month. Federal government statistics show that January is usually the most popular month for federal employees to retire, with an annual average of around 8,300 retiring in January between 1992 and 2001. 2 January is likely to be a high volume month again in 2010, as most federal employees eligible to retire were able to maximize the lump sum payment for unused vacation time by retiring on January 1, 2, or 3. 3 Exactly how this trend impacted the data is hard to tell. The federal government actually gained 24,000 non-census j
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