A new Philadelphia Fed report has fueled a Tucker Carlson conspiracy. Here’s what the report says and what it means

“Why are they lying to us about this,” asked Tucker Carlson, the FOX News pundit and host of Tucker Carlson Tonight, on Wednesday.

The lie, he says, is Bureau of Labor Statistics data about the jobs market. Carlson says the jobs data was overstated, which in turn helped the Democrats keep control of the U.S. Senate and give Fed Chair Jerome Powell the ammunition to lift interest rates. “The administration wants Powell to raise rates because they think it’ll offset the inflation that Joe Biden’s policies have caused,” says Carlson.

The basis for Carlson’s claim is a report from the Philadelphia Fed. The regional central bank is starting to publish a new report, called the early benchmark revisions of state payroll employment, drawing not just on the BLS’s current employment statistics– the basis for the monthly payrolls data — but also the quarterly Census of Employment and Wages.

(Note that the Philadelphia Fed is relying on BLS data — the alleged source of the conspiracy, per Carlson — to produce its numbers.)

The Philadelphia Fed last week said that only 10,500 net new jobs were added between March and June, compared to the 1.05 million reported in the nonfarm payrolls reports.

In the two previous quarters that the Philadelphia Fed has examined, however, it didn’t find a big disparity. In the first quarter, the Philadelphia Fed estimated 1.7 million were jobs were created compared to 1.62 million for the BLS, and in the fourth quarter of 2021, the Philadelphia Fed estimated 2.02 million jobs were created, compared to only 1.91 million for the BLS.

Economists at First Trust led by Brian Wesbury point out the Philadelphia Fed model is new. “Given that the Philadelphia Fed just started publishing results from its own internal model, meaning there isn’t much of a track record to go on, we’d say it’s probably right to take this report with a grain of salt. Theoretically, everything about this model might be sound, but even sound models often clash with reality. For example, the ADP model has never lived up to its hype,” they say.

In particular, the First Trust team say what could be the issue is that seasonality is not fully accounted for in the new model.

And in fact, the household report — the part of the jobs report used to calculate the unemployment report — says that employment fell by 347,000 in the second quarter.

“Given the divergence between data from the household and establishment surveys in 2022 we wouldn’t be surprised at all by downward revisions to the employment data when they are released in March of 2023. But we will definitely take the over on 10,500 jobs added in Q2,” they say.

Reports from the private sector also didn’t reveal a dramatic second-quarter slowdown in employment. The National Federation of Independent Business, the small-business trade group that surveys a traditionally conserative membership, found a fairly constant percentage planning to increase employment over that time period. The American Staffing Association’s staffing index also was steady.

The Institute of Supply Management’s employment indexes for manufacturing and for services, in June, both did dip into contraction territory but both recovered in July.

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