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Our most academic publication offers research and surveys on monetary policy, national and international developments, banking, and more. The content is written for an economically informed readership—from the undergraduate student to the PhD.


Vol. 89, No. 5 (Posted 2007-09-01)

How Well Does Employment Predict Output?

by Kevin L. Kliesen

Economists, policymakers, and financial market analysts typically pay close attention to aggregate employment trends because employment is thought to be an important indicator of macroeconomic conditions. One difficulty is that there are two separate surveys of employment, which can diverge widely from one another, as the previous and current economic expansions demonstrate. The conventional wisdom is that, for assessing economic conditions, the survey that counts the number of jobs (establishment survey) is preferable to the survey that counts the number of people employed (household survey). However, results from a one-quarter-ahead forecasting exercise presented in this paper suggest that analysts should question whether employment is a useful indicator for predicting output growth.

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