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BLS Payroll Revisions: Forecasting Recessions

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Abstract

We investigate the behavior of BLS monthly revisions to payroll growth at turning points. We find some evidence corroborating claims by former BLS commissioners and market analysts that revisions around turning points tend to be procyclical and more serially correlated. Furthermore, we do see large revisions before turning points. However, the ability to use revisions to forecast business cycles' turning points seems limited. First, we do see lots of false positives: large revisions occur without a subsequent recession. Second, even within-sample, other indicators, such as initial jobless claims, the Chicago Fed National Activity Index, and the Aruoba-Diebold-Scotti Index, do a better job at detecting recessions. Finally, out-of-sample forecasting performance of revisions is poor.

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  • Roberto Pinheiro & Rory G. Quinlan, 2025. "BLS Payroll Revisions: Forecasting Recessions," Working Papers 25-26, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwq:102239
    DOI: 10.26509/frbc-wp-202526
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    1. Travis J. Berge & Òscar Jordà, 2011. "Evaluating the Classification of Economic Activity into Recessions and Expansions," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 246-277, April.
    2. Nicholas Haltom & Vanessa D. Mitchell & Ellis W. Tallman, 2005. "Payroll employment data: measuring the effects of annual benchmark revisions," Economic Review, Federal Reserve Bank of Atlanta, vol. 90(Q 2), pages 1-23.
    3. Rolando Pelàez, 2007. "Ex ante forecasts of business-cycle turning points," Empirical Economics, Springer, vol. 32(1), pages 239-246, April.
    4. Marco Del Negro, 2001. "Turn, turn, turn: Predicting turning points in economic activity," Economic Review, Federal Reserve Bank of Atlanta, vol. 86(Q2), pages 1-12.
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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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