U.S. STATISTICS MISS RECESSION'S IMPACT, AGENCY SAYS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 3, 1992                   TAG: 9202030027
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-6   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE:                                 LENGTH: Medium
U.S. STATISTICS MISS RECESSION'S IMPACT, AGENCY SAYS
The federal government may have seriously underestimated the impact of the recession on some of the major states and undercounted job losses across the United States by more than 2 million, according to an analysis by the California State Department of Finance.
Payroll-tax filings in California, New York, Virginia and other states indicate an extraordinary free fall in jobs in late 1990 and early 1991. California has suffered its worst job losses in more than half a century, according to these records. The federal government may have underestimated this plunge in California alone by more than 500,000 jobs, according to state officials.
"To me it's very obvious that the recession is far, far deeper than the [Labor Department] figures are indicating," said Ted Gibson, principal economist with California's Department of Finance.
The surprising reports - while far from definitive - are gaining attention because they are based on statements filed quarterly by almost all private employers. By contrast, the Labor Department's widely quoted jobs data come from smaller surveys that may not fully detect sudden, sharp swings in the economy for many months.
The payroll-tax figures not only raise questions about the accuracy of information relied on by U.S. policymakers as the recession gathered steam in 1990 and 1991, but also may provide a clue as to why consumer confidence last year fell to the lowest levels in a decade, according to economists in government and the private sector.
"There must be something rotten in Denmark with those national numbers, because we haven't gone through a mild recession," said Allen Sinai, chief economist with the Boston Company. "I think what the jobs data in states like California is finding is much more telling."
The nation's jobs picture is officially drawn from findings by the Labor Department's Bureau of Labor Statistics, in cooperation with state agencies. At issue are the payroll employment statistics, which describe how many jobs are gained or lost each month.
A puzzling and vast gulf seems to have opened, however, between the official payroll-jobs totals - meant to reflect the number of jobs in the economy - and what employers actually reported to the government early last year.
Nationally, the disparity between jobs actually lost since the recession began in mid-1990 and the official number appears to exceed 2 million, Gibson said.
When asked about the gap, labor statistics officials said they annually reviewed their statistical assumptions about job totals, in addition to making routine revisions, and were expected to adjust last year's findings on the overall number of jobs in the coming months. Bureau officials have said they may revise the nation's job count downward by 650,000.
Some economists also point out that the payroll-tax records are not perfect and should be considered in context. It is possible that some of the tax data is inaccurate, reflecting cheating by employers. And discrepancies between official job counts and state payroll records appear to be focused in a handful of major industrial states.
Donald Ratajczak, a Georgia State University economist, said the gap is evident in statistics from Virginia and Florida, but does not emerge in most of the Midwest.

by Bhavesh Jinadra by CNB