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  Job losses in 2009 likely bigger than thought
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ContributorScottĀ³ 
Last EditedScottĀ³  Oct 07, 2010 06:00am
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CategoryNews
AuthorLucia Mutikani
MediaNews Service - Reuters
News DateThursday, October 7, 2010 11:00:00 AM UTC0:0
Description"The economy likely shed more jobs last year than previously thought, but analysts say the undercount by the government should prove less severe than it did during depths of the recession.

The Labor Department on Friday will give an initial estimate of how far off its count of employment may have been in the 12 months through March. The government admitted earlier this year that its count through March 2009 had overstated employment by 902,000 jobs.

Analysts expect a much smaller miscount this time, given the economy's growth spurt in the second half of last year.

The department blamed its 902,000 miss on faulty estimates of how many companies were created or destroyed, and it has not yet made any changes to the so-called birth-death model that produces this projection.

Once a year, it compares payroll data from its monthly surveys of employers with unemployment insurance tax reports, which give it a much more comprehensive view of actual employment. It uses these tax records to produce a "benchmark revision" to adjust for discrepancies.

"That adjustment is probably overstating the employment gains because we are in a very subdued recovery and the likelihood is that the birth-death factor is making the data look better than it otherwise would be," said Neil Dutta, an economist at the Bank of America Merrill Lynch in New York.

Tax records will probably show more businesses closed than initially estimated by the Labor Department, analysts said."
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