Revisions to US labor market data and the public's perception of the economy

- I study the revisions to the monthly US employment data over 1994-2013.
- Revisions to net job creation are sizable, averaging about 75 thousand.
- News on the labor market affects the public's perception of the economy's stance.
- Below-trend employment data trigger a below-trend job approval rating of the President.
- The public's perception of the economy might be distorted by the report's errors.

Using the monthly “Employment Situation” reports for 1994-2013, this paper studies the revisions to US employment data. The paper shows that the first press release underestimates net job creation in expansions and overestimates it in downturns. The “errors” in reporting the data on the labor market can distort the public's perception about the stance of the labor market and have some political consequences. This is well reflected by the finding that the job approval rating of President Obama, the index of consumer confidence, and the economic conditions index of Gallup have all been responding to the initial news on the US labor market as they were published in the Employment Situation reports.