The Birth/Death adjustment was designed to capture the jobs at new, small firms who are missed in employment surveys. It's important because small start-up firms are the major job creators in the economy. Historically, in a healthy economy, start-up firm's job creation typically exceeds small firm failures by a wide margin. But, this situation hasn't been true since the 2007 crisis. In fact business deaths have exceeded new business births since 2008. This means that the Birth/Death adjustment since 2008 should be nearly zero or negative -- not hugely positive.
|Fake Job Creation Compliments of the US Govt-Especially after 2008|
But evidence shows that more businesses are dying than being created which means there is no basis for a positive Birth/Death adjustment since 2008. From Morningside Hill:
|After the 2007 Crisis More Businesses Are Dying Than Born (The Trend Continued After 2011)|
|Business "Births" Remained Lower After 2009 To The Present|
Well, full-time jobs are being replaced by multiple part-time positions, and are double and triple counted in the Establishment Survey, so the numbers of jobs sound impressive, but the quality of jobs has declined.
The US has added a net 6.7 million jobs over the past 9 years and most were part-time jobs, while the birth and death model added 6.3 million of these jobs, this means that the actual number of full-time jobs has declined significantly. This explains why wages are mostly declining. It's also why inflation is not heating-up in general. The employment situation is still not good -- despite what the government tells you.
The sad thing is that all of the highly-paid and PhD educated economists at the Federal Reserve must believe the phony government numbers. Janet Yellen insists that the economy is nearly overheating and that the Fed must increase interest rates to tame inflation.
But it's just a case of errors on top of errors. They (the Fed) really don't know what they're doing.