Back to the Future:Using Current Regression Variables to Forecast Forward from Historical Net Birth/Death Employment

Victoria Battista


The Current Employment Statistics (CES) 2 program uses a birth/death model to account for changes in employment that are not captured in the CES sample. One part of this model, the net birth/death residual forecasts, has regularly added between 800,000 and 1,000,000 jobs to the CES employment level on an annual basis from 2003 to 2008. During the most recent recession, the birth/death residual dropped to less than 300,000, a change that was not picked up by the forecasting model and contributed to a very large benchmark revision. CES has been conducting research to determine if the CES birth/death model, based currently on historical time series, could benefit from the incorporation of an additional, more timely regression variable.