A proposal to move monthly jobs reports to a quarterly schedule has stirred concern in the commercial real estate world, where players of all stripes use the data to navigate economic and demographic shifts that impact leasing and underwriting decisions.
The employment situation report from the Bureau of Labor Statistics serves as a cornerstone for CRE players to understand the market. Releasing it less frequently would reduce clarity and add new uncertainty to an already unpredictable environment that has slowed deals for years.
“If you look at only one thing in the economy to understand real estate data, you should be looking at the monthly jobs report,” MSCI Executive Director Jim Costello said.
“There’s nothing like that in the rest of the world. The U.S. economy is one of the most transparent in terms of economic information, which makes it easy for investors.”
Reducing the frequency of the report’s release was an idea floated by E.J. Antoni, chief economist at The Heritage Foundation and President Donald Trump’s nominee to replace former BLS Commissioner Erika McEntarfer. Trump fired McEnfarter on Aug. 1 after downward revisions to the previous month’s jobs picture.
Antoni proposed releasing the jobs report quarterly as a way to minimize the need for revisions during a Fox News interview earlier this month.
“How on earth are businesses supposed to plan — or how is the Fed supposed to conduct monetary policy — when they don’t know how many jobs are being added or lost in our economy? It’s a serious problem that needs to be fixed immediately,” he said.
“Until it is corrected, the BLS should suspend issuing the monthly job reports but keep publishing the more accurate, though less timely, quarterly data.”
Those comments were made before he was nominated and don’t represent official BLS policy, a White House spokesperson told The Wall Street Journal. BLS didn’t respond to Bisnow’s request for comment.
But Trump and members of his administration have demonstrated a willingness to shake up long-held norms as the president implements big changes in his second term.
Less frequent jobs reports could present a major roadblock for CRE decision-making, which has already spent months mired in uncertainty.
Brokers use the jobs data to draw conclusions about demand drivers that allow them to adjust leniency of leasing terms and concessions they offer on a month-by-month basis, said Fernando Ferreira, professor of real estate at The Wharton School of the University of Pennsylvania.
The frequency of the reports makes them particularly valuable for high-turnover segments of CRE like the hotel sector.
Data about the velocity of activity in different regions and sectors of the economy also helps institutional investors, but Ferriera said the long-term nature of these decisions means these players are less dependent on the monthly updates than some corners of CRE.
The exception is in times of economic upheaval, when short-term changes in the jobs data can have long-term impacts, Ferreira said.
“A lot can change in the labor market over the course of a few months, especially during periods of dislocation or deterioration,” BGO Chief Economist Ryan Severino said in a statement to Bisnow.
CRE professionals could turn to other data sources if they lose the ability to access the BLS data the way they have historically.
Smaller players making hyperlocal real estate decisions are already more focused on conditions in their submarkets than the broad snapshot BLS provides, Costello said.
Institutional analysts already supplement BLS data with employment numbers from LinkedIn and ADP and geographic cellphone data from Placer.ai and Advan Research Corp.
The Suitland Federal Center in Maryland houses the Bureau of Labor Statistics and the Census Bureau.
But many firms have long centered their research and analysis on the BLS jobs numbers. Releasing them less frequently would create big gaps that would need to be filled with alternate data and require major adjustments to existing practices.
“You’re switching to some new system,” Costello said. “It’s not going to perfectly replicate what was there before.”
Antoni’s proposal frames standard revisions to BLS’ monthly jobs report as a grave issue, but Severino said he sees them as an important part of the process.
Surveying all American business on a monthly basis is virtually impossible, he said. Companies form and dissolve on short notice, and the workforce staffing them changes constantly.
“All of that can make estimates somewhat inaccurate,” he said. “But as the BLS obtains more/better information in subsequent periods, it updates its findings. Plus, historically, outside of periods of significant disruption, revisions tend to be relatively minor and within published confidence intervals.”
Revisions like the one that raised Trump’s ire ahead of McEntarfer’s firing aren’t ideal, but Costello said he doesn’t see releasing jobs data less frequently as a good solution. Instead, he wants the federal government to invest more in the BLS so it can improve its surveying practices and reduce the number of errors.
The transparency around BLS’ jobs numbers and other related federal data is a big part of what sets the U.S. apart from other global economies.
“The government here has always been helpful in terms of providing a stable regulatory framework and many data sources,” Ferreira said. “It gives more certainty for the whole market.”
Costello hasn’t heard any rumblings in the industry about the jobs report being done away with entirely.
“Nobody is jumping off their roofs yet, thinking it’s all going to go away,” he said. “There’s an understanding that this is so important that at some level it’s going to continue.”
But he said he was concerned that reducing its frequency would put a damper on CRE transactions.
“People act when there’s clarity around what they’re doing,” Costello said. “If you remove clarity, you reduce action.”