Late last year, Canada was hit with a bombshell: There were 1 million more people in the country than believed. For a country of 40 million people, that's an incredible mis-count. It helped to explain why Canadian jobs data had been so strong in 2023, despite a cooling economy.
Is the same thing happening in the US?
The WSJ writes about that today, highlighting that the household survey is vastly undershooting the establishment survey.
To get its employment figure from the household survey, the Labor Department calculates the share of the population that is working and then applies it to population estimates from the Census Bureau. This might be the source of the discrepancy: That population estimate might be off.
The report argues that the US can add 160-200K jobs per month without driving the unemployment rate lower, much more than the 100k assumed.
That thinking would also help explain why initial jobless claims have remained so low: Illegal immigrants don't qualify.
What does that mean for the Fed? It certainly complicates the picture because it means that potential growth is higher but it's less inflationary.
