Summers: Blame it on the Snow

Larry Summers on CNBC: “Very important to look past the next [employment] figures.” (27 second long after ad)

Last week I spoke to a BLS representative, and although they will not comment on upcoming releases, he told me the BLS would prominently disclose any possible impact of the recent snow storms on the employment report – similar to the disclosure after Hurricane Katrina. It is possible that the response rates will be lower than usual in certain areas (like Washington D.C.) and this will be disclosed and adjustments will be made.

Although we should be extra cautious with the February report, I think we should read the BLS disclosure before dismissing the report. In January 1996, the BLS included a short disclosure:

Nonfarm payroll employment declined by 201,000 in January and the unemployment rate edged up to 5.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Unusually severe weather in the eastern part of the country affected the number of payroll jobs in January and also caused a particularly large drop in the average workweek.

Most of the decline in January 1996 was eventually revised away.

However the disclosure after Hurricane was more extensive – and the eventual revision much smaller.

Take the February report with a shovel of rock salt, but lets see the disclosure (if any) before dismissing the report completely.