Several observers have pointed out the gap between civilian employment as measured by the CPS, and the nonfarm payroll employment numbers obtained from the CES. The CPS measure includes new population controls, which depend on the estimated immigration. CBO estimates a lot more net immigration than Census, which when applied to employment might alter our views of employment.

From Orrenius et al. (2024).

Source: Orrenius et al./Dallas Fed (2024).

Over 2022-23, CBO estimates 3.9 million more net immigrants than Census. Wedging in this number into 2021M07-23M06 population, using the same labor force participation rate and  employment-to-labor force rate as observed through 2023M06 yields the following picture.

Figure 1: Civilian employment as reported (bold orange), adjusted to add in extra 3.8 mn immigrants (pink). Uses reported increase in employment for 2023M07-06. Source: BLS, Dallas Fed, and author’s calculations.

This modifies the picture of business cycle indicators including alternative employment

Keep reading this article on Econbrowser Blog - James Hamilton & Menzie Chinn.

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