Just Released: Annual Revisions to Unemployment and Job Growth Estimates

Tuesday, March 15, 2022
Andrew Berger-Gross

In a world awash in economic uncertainty, we rely on dependable sources of information to guide our decision-making. Data from government agencies such as the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) offer a reliable and unbiased reading on the condition of our economy. However, these data represent estimates and should be interpreted with caution when they are initially published, as they are often released in preliminary form and are subject to revision.

Each year around this time, the BLS publishes revised job growth and unemployment and labor force statistics for all states. These annual revisions incorporate information that was not available when the data were first published. We report on these revisions every year; see last year’s article for an example. While revisions are necessary to ensure our understanding of the economy is as accurate as possible, they can result in changes that are sometimes modest, and sometimes dramatic.

This year’s revisions to North Carolina’s unemployment and labor force estimates were relatively trivial [Figure 1]. Our state’s unemployment rate ended 2021 at 4.1%, slightly higher than the preliminary estimate of 3.7%.

Figure 1

However, revisions to our job growth estimates were more noteworthy, resulting in meaningful shifts in our understanding of North Carolina’s economic performance during the COVID-19 pandemic. Revised figures show that job growth in our state was considerably stronger than initially estimated [Figure 2]. Total nonfarm employment in North Carolina returned to pre-pandemic levels by the summer of 2021—a symbolically important milestone indicating a full recovery from the COVID-19 recession.

Figure 2

Data revisions were particularly large for some industry sectors, painting a notably different picture than the preliminary figures. For example, North Carolina’s Financial Activities sector added jobs throughout 2020 and 2021 at a much faster pace than initially estimated, ending the year a robust 7% above its February 2020 employment level, as opposed to the marginal recovery depicted in the preliminary numbers [Figure 3].

Figure 3

What do these revisions mean for data users? How can we understand what is happening in the world around us when economic statistics that are reported today are subject to revision at a later date?

It is important to acknowledge that no data point is perfect. Any effort to gauge economic conditions in real time is bound to be clouded by uncertainty. We recommend that data users consult a wide range of high-quality information sources to guide their decision-making. If all these indicators point in the same direction, then you can be relatively confident in the story they are telling. If these indicators contradict each other, then you should exercise caution before drawing conclusions about the state of the economy.

We also recommend that you be judicious when interpreting month-to-month movements in economic data and, if possible, focus instead on long-term trends. Monthly data are often noisy, subject to revision, and represent only a snapshot of the economy. Long-term trends are much more stable, less affected by data revisions, and provide more reliable information about what is happening in our economy.