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Parker Ross @econparker.bsky.social · 11/09/2026

Core CPI runs a bit higher than Core PCE, which is the Fed's actual target price index... A 0.2% per month pace on Core CPI is roughly consistent with 2% for Core PCE

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Parker Ross @econparker.bsky.social · 11/09/2026

Last chart, and perhaps the most important one: smooth through the noise. August core CPI: +0.29% 3m avg: ~0.16% 6m avg: ~0.21% One noisy print doesn’t make a new inflation trend.

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Parker Ross @econparker.bsky.social · 11/09/2026

So yes, August CPI was hot. But the heat was remarkably concentrated: Energy → headline Wireless + hotels → core services / supercore Vehicles → core goods That looks a lot more like monthly noise than a sudden broad-based reacceleration in inflation.

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Parker Ross @econparker.bsky.social · 11/09/2026

Core goods inflation was a modest +0.11% m/m. Virtually all of that came from transportation commodities, split roughly evenly between new and used vehicles. Everything else in core goods was essentially flat on net.

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Parker Ross @econparker.bsky.social · 11/09/2026

Core services looked hot too at +0.33% m/m. But again, look at the composition. Wireless phone services contributed 12.7bps and lodging another 5.5bps. Together, those two categories accounted for more than half of core services inflation in August.

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Parker Ross @econparker.bsky.social · 11/09/2026

Headline CPI looked hot too at +0.40% m/m. But energy alone contributed 15bps - nearly 40% of the increase - and generally expected. Food added just 2bps. Again, composition matters.

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Parker Ross @econparker.bsky.social · 11/09/2026

And it’s not just supercore. Wireless services + lodging away from home contributed 14bps of the 29bp increase in core CPI. Everything else combined: ~15bps. Two notoriously noisy categories did a lot of work in this report.

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Parker Ross @econparker.bsky.social · 11/09/2026

Supercore CPI jumped 0.51% m/m in Aug, briefly sending Sept hike odds to ~100%. But 29bps - more than half of the increase - came from wireless phone services alone. Unless the Fed plans to hike to get your cell phone bill under control, I’d be careful reading too much into the spike. 🧵 #econsky

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Parker Ross @econparker.bsky.social · 11/02/2026

One final note: an AI-generated analysis went viral today claiming the B-D model added +145k to January payrolls. The actual number was -61k. Wrong number, wrong sign, wrong framework. Check bls.gov/web/empsit/c... before posting. It takes 5 seconds.

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Parker Ross @econparker.bsky.social · 11/02/2026

Did it drive the beat? No. The underlying employer survey data was strong, independent of the model. Strip the B-D out entirely and job growth was still at or above normal.

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Parker Ross @econparker.bsky.social · 11/02/2026

So to summarize: Was the B-D more favorable than usual in January? Yes – both at the headline level and in Education & Health Services sector. That's a fair critique and worth monitoring.

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Parker Ross @econparker.bsky.social · 11/02/2026

The labor market produced a normal January. The seasonal adjustment turned that into a +130k SA headline. The birth-death model's relative generosity didn't change the outcome.

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Parker Ross @econparker.bsky.social · 11/02/2026

For total nonfarm, the same exercise tells a more modest but still positive story. Ex-B-D job growth in January was roughly in line with the historical norm – not dramatically above it, but not weak either.

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Parker Ross @econparker.bsky.social · 11/02/2026

The underlying survey data – not the model – drove the outsized strength. The Birth-Death adjustment was along for the ride.

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Parker Ross @econparker.bsky.social · 11/02/2026

For education & health services, stripping out the B-D and comparing to the historical norm shows Jan ‘26 was approximately 90k above normal. The largest positive deviation since the post-COVID recovery.

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Parker Ross @econparker.bsky.social · 11/02/2026

This isolates actual survey responses – what employers reported directly to BLS – from the model's estimate of business births and deaths, along with seasonal adjustment challenges. If the B-D were manufacturing the strength, the ex-B-D data should show weakness. It doesn't.

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Parker Ross @econparker.bsky.social · 11/02/2026

Fine, it was a tailwind. But here's the test. Strip the B-D adjustment out of the reported NSA gains entirely, then compare what's left to the pre- and post-COVID norm (average of 2017–2019 and 2023–2025).

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Parker Ross @econparker.bsky.social · 11/02/2026

The model assumed more net business creation in the sector than usual. So, the question isn't whether the B-D was generous. It was. The question is whether it drove the beat.

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Parker Ross @econparker.bsky.social · 11/02/2026

The same is true for Education & Health Services, which I’ve also heard singled-out. The January 2026 B-D of +85k was historically elevated – and indeed the largest tailwind of all sectors – with prior Jan adjustments ranging from roughly 5k to ~45k.

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Parker Ross @econparker.bsky.social · 11/02/2026

So yes, the B-D model was a relative tailwind compared to history.

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Parker Ross @econparker.bsky.social · 11/02/2026

That said, there's a fair observation buried in the bad math. The Jan ‘26 total nonfarm B-D adjustment of -61k was less negative than the typical January reading, hence the chart at the top, which has ranged from roughly -100k to -250k over the prior decade.

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Parker Ross @econparker.bsky.social · 11/02/2026

They're in different statistical frameworks. The B-D is applied to *not seasonally adjusted* data. The headline is *seasonally adjusted* - mixing them is arithmetically meaningless.

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Parker Ross @econparker.bsky.social · 11/02/2026

First, the fundamental error: you cannot subtract the not seasonally adjusted (NSA) birth-death adjustment from the seasonally adjusted (SA) headline payroll number.

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Parker Ross @econparker.bsky.social · 11/02/2026

Here we go again… A lot of analysis today claiming the birth-death model inflated the Jan job gain (130k). Some are even subtracting the B-D contribution from the headline to argue the "real" number was negative. The underlying logic is flawed – but there's a kernel of truth. 🧵 #EconSky

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Parker Ross @econparker.bsky.social · 11/02/2026

Going forward, the modified birth-death model should narrow this gap. But the lesson: treat any single monthly print with healthy skepticism, and watch the trend.

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Parker Ross @econparker.bsky.social · 11/02/2026

Bottom line: The Fed was making policy in 2025 based on labor market data that significantly overstated job growth. The revised data suggests the economy was cooling faster than anyone in the room knew.

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Parker Ross @econparker.bsky.social · 11/02/2026

The honest framing: the trend has turned higher, and that matters. But we won't know if this rebound is real until the next annual benchmark. Until then, treat the direction as signal and the magnitude as provisional.

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Parker Ross @econparker.bsky.social · 11/02/2026

There's no guarantee the recent acceleration isn't facing the same fate. The BLS's modified birth-death model is designed to fix this. Early results are promising. But it's one methodological adjustment against a problem that's been compounding since at least 2023.

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Parker Ross @econparker.bsky.social · 11/02/2026

But can we trust the rebound? Two consecutive years of massive downward revisions (-598k in '24, -861k in '25) should give anyone pause. The monthly data has systematically overstated job growth for two straight years, and not by a small amount.

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Parker Ross @econparker.bsky.social · 11/02/2026

January's +130k total nonfarm job growth print is the first statistically significant month of job growth in a year. Not a blowout. But given where we've been, a meaningful inflection.

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Parker Ross @econparker.bsky.social · 11/02/2026

The narrative that matters for 2026 isn't "the BLS overstated jobs by 900k." It's that the labor market quietly absorbed an even more significant slowdown than we could see in real time… and came out the other side.

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Parker Ross @econparker.bsky.social · 11/02/2026

The 3-month average is even more emphatic, accelerating into year-end and through Jan ‘26. The revised picture: the labor market was far weaker than reported, found a floor, and is now rebuilding momentum.

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Parker Ross @econparker.bsky.social · 11/02/2026

Here's where it gets interesting. Instead of dwelling on how weak 2025 was, look at the trajectory. The 6m avg for private-sector job growth bottomed near zero around mid-2025. By Q4, it was clearly inflecting higher.

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Parker Ross @econparker.bsky.social · 11/02/2026

Without it, we'd be talking about a revision north of -1.1m. The fix is helping, but clearly not enough to eliminate the problem.

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Parker Ross @econparker.bsky.social · 11/02/2026

The original B-D model added 1,160k jobs over Apr–Dec '25. Revised: 917k. That's 243k in phantom jobs stripped out. BLS already applied this modified approach to the 2024 post-benchmark period, where it pulled 228k out of B-D forecasts and reduced the Mar '25 benchmark revision by -229k.

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Parker Ross @econparker.bsky.social · 11/02/2026

A key methodological change buried in this release: BLS permanently modified the birth-death model to incorporate current sample information into monthly forecasts – not just during the annual post-benchmark recalculation.

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Parker Ross @econparker.bsky.social · 11/02/2026

What's left? Private Education & Health Services (averaging ~60k/mo) accounted for virtually all private-sector job growth in 2025. Strip that out and the private sector was contracting by an average of -30k/mo.

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Parker Ross @econparker.bsky.social · 11/02/2026

The more telling picture is what the revised data says about where growth actually came from in 2025. The revisions flipped two sectors from positive to negative average monthly growth: Construction and Retail Trade. Sectors supposedly adding jobs all year were actually shedding them.

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Parker Ross @econparker.bsky.social · 11/02/2026

Nearly red across the board, with Financial Activities (-2.5%) and Retail Trade (-1.9%) taking the largest percentage hits.

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Parker Ross @econparker.bsky.social · 11/02/2026

Where were the revisions concentrated? Nearly every sector was revised down. Top 3 Downward Revisions Wholesale Trade: -309k (-1.1%) Other Services: -153k (-0.9%) Transportation & Warehousing: -128k (-0.8%)

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Parker Ross @econparker.bsky.social · 11/02/2026

After Mar '25 (the benchmark anchor) the two series converge. Month-to-month growth looks broadly similar, with modest differences from revised birth-death forecasts and seasonal adjustments.

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Parker Ross @econparker.bsky.social · 11/02/2026

The same story holds for total nonfarm. The BLS wedge-back procedure distributes the benchmark error gradually from Apr '24 forward, so the largest divergences between the original and revised monthly growth appear in 2H24 and 1Q25.

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Parker Ross @econparker.bsky.social · 11/02/2026

Jan '26 was the first month where job growth was statistically distinguishable from zero since Jan '25. Twelve straight months where we couldn't confidently say the private sector was adding jobs.

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Parker Ross @econparker.bsky.social · 11/02/2026

The revised data doesn't just fall below the original... for multiple months in 2H25, it drops below the lower bound of the 90% confidence interval. This wasn't normal sampling error. It was systematic overstatement.

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Parker Ross @econparker.bsky.social · 11/02/2026

This chart tells the story. The grey line is originally published total private monthly job growth with 90% confidence bands. The blue line is what BLS now says actually happened.

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Parker Ross @econparker.bsky.social · 11/02/2026

The March benchmark is just the anchor. What matters is what it does to the full year of data. Previously published 2025 total nonfarm job growth: +584k (avg +49k/mo) Revised: +181k (avg +15k/mo). That's not a rounding error. That's a fundamentally different labor market.

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Parker Ross @econparker.bsky.social · 11/02/2026

The final benchmark revision for March 2025: -898k (SA), or -0.6%. The NSA revision: -861k, or -0.5%. The -861k revision is more than 8x the prior decade's average (-103k). The preliminary estimate from September was -911k. The final came in slightly less severe, but the story is unchanged.

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Parker Ross @econparker.bsky.social · 11/02/2026

The BLS just released the *final* CES benchmark revisions with this morning's jobs report. The 2025 labor market was dramatically weaker than originally reported... and for 12 straight months, job growth was never statistically different from zero. A deep dive with charts in the 🧵 #EconSky

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Parker Ross @econparker.bsky.social · 09/01/2026

Real-time policy transmission... Collapsing mortgage spreads translating to immediate relief for the 30Y fixed rate mortgage. First time below 6% since early '23 according to MND #EconSky

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