Consider the pending census. In the last week, I have seen heavy public hype of the large jobs gains ahead (with census impact not mentioned), comments to the effect that census hiring will jump-start the economy, even a wire-service story referring to the census as a government economic-stimulus plan. 

The U.S. census to be conducted as of April 1, 2010 will have fleeting impact on employment and negligible impact on the economy. While hundreds of thousands of part-time census jobs will spike payroll employment in March through May 2010, they all will be lost in sharp (hundreds of thousands) payroll losses in June through September. That, at least, is the pattern of jobs change around the 2000 census, which also was conducted as of April 1st. Details of temporary census jobs patterns seen around the last two census periods are available from Bureau of Labor Statistics (BLS).

I would not take seriously anyone who is touting the pending jobs surge but not adding some qualification as to the temporary nature of census impact.

By nature, the census jobs will be very short-lived and intermittent, and generally on a part-time basis. While any increase in gainful employment is a positive, the effects here should be so limited as to be hardly noticeable as a blip in the economy.

The census is not an economic stimulus package being put forth by the Obama administration. It is a decennial survey mandated by the U.S. Constitution and has been conducted accordingly every 10 years since 1790.

Revisions and Gasoline and Food Prices Boosted February Retail Sales. As of last month’s report, retail sales for the seasonally-adjusted three months ended January 2010 totaled $1,064.6 billion. That number was revised to $1,062.6 billion in the February release, with the three months through February 2010 totaling $1,063.7 billion. The small relative gain in the latest period is due to prior-period downward revisions. The latest data show a weaker retail sales environment that did the initial January numbers. This is before adjustment for inflation, which continues to show the broad series bottom-bouncing along a low-level plateau of activity. 

Rising gasoline and food prices — as suggested by increased gasoline station and grocery store revenues — accounted for 58% of the reported monthly gain in February sales. Where gas and food prices accounted for 27% of initially-reported January sales, such revised to 113% of January sales in the latest reporting. Inflation issues extend beyond food and energy, and any relatively positive news in retail sales in the year ahead should reflect primarily inflated prices, not higher physical volume of sales.

As discussed in earlier writings, the February data likely still were spiked some by the unusual seasonal-adjustment patterns generated in this extremely protracted and deep economic downturn, the most severe disruption in business activity since modern economic reporting was established in the post-World War II period. There is a good chance that a combination of catch-up in poor-quality seasonals plus an actual renewed deterioration of activity will generate a meaningfully-negative "surprise" in next month’s retail sales report.

There also may be questions on sampling that parallel the surveying issues seen in the Bureau of Labor Statistics Birth Death Model, as discussed in Commentary No. 276, where companies that have gone out of business are assumed to be continuing as they were. Anecdotal evidence continues to mount of a large number of small retail business closings early in 2010. If there is a surveying problem in this area, such could become evident in the benchmark revision to the series due for release on April 30th.

Reported Nominal Retail Sales. Today’s (March 12th) retail sales report on February 2010 — issued by the Census Bureau — indicated a statistically-insignificant, seasonally-adjusted monthly gain of 0.34% (down 0.06% net of revisions) +/- 0.6% (95% confidence interval). Such followed a revised 0.15% (previously 0.48%) monthly gain in December. Although the February numbers likely reflected some dampening effect of severe blizzards, the monthly gain was spiked by downward revisions to prior reporting as well as ongoing inflation. On a year-to-year basis, the February 2010 retail sales were reported up by 3.85% from February 2008, versus a downwardly revised 4.08% (4.71%) annual gain in January.

Real Retail Sales. Removing the effects of inflation, February 2010 retail sales activity likely will show both monthly and annual gains, although the revised real January number has turned negative month-to-month in revision.  The pattern of ongoing, inflation-adjusted activity, however, remains one of bottom-bouncing/plateauing at extremely low levels. Details will be updated and graphed with the Commentary following the March 18th release of the February CPI.

Core Retail Sales.  The "core retail sales" methodology was revamped recently, where the net relative monthly increases and/or decreases in gasoline station and grocery store sales were subtracted from the full monthly retail sales number, instead of the total of gasoline station and grocery store revenues each month. Assuming that the bulk of non-seasonal variability in food and gasoline sales is in pricing, instead of demand, the revamped reported "core" change more closely reflects the actual retail sales experience. This remains a work in progress and eventually will be used in the development of additional SGS alternative economic measures.

For the near-term, the "core" retail sales is reported in two versions, where Version I uses the original methodology, and Version II version appears to provide a more balanced picture of the impact food and energy inflation in the standard retail sales reporting.

Consistent with the Federal Reserve’s predilection for ignoring food and energy prices when "core" inflation is lower than full inflation, "core" retail sales:

Version I — February retail sales net of total grocery store and gasoline station revenues — rose by 0.2% versus the official aggregate gain of 0.3%.

Version II — February retail sales net of the monthly change in revenues for grocery stores and gasoline stations — rose by 0.1% versus the official aggregate gain of 0.3%.