Thanks to John Munoz @www.bzintelguru.com for inspiration…
Fact: US Unemployment is definitely at 10.2% http://bit.ly/Govk
This is a link to the well reported unemployment rate that we’ll challenge in two difference sources. First, let’s go to the NYT for a challenge:
Fact: US Unemployment is definitely 9.5% http://bit.ly/3yQLGF
Here, Floyd Norris questions whether seasonally adjusting unemployment in October was helpful to understand unemployment trends. He cites the fact that October has the largest downward adjustment for seasonal variances (holiday hiring usually starts in this month) and wonders if it’s helpful in a nascent recovery to use that adjustment. 80,000 additional people really did get jobs in the month.
So, does seasonally adjusting the unemployment rate help bring visibility in recessions? Are fancy formulas obscuring reality or helping to clarify reality?
I needed perspective, so I went to my first business cycle textbook (almost 20 years old, but hey, business cycles are on longer scales than we live in) for perspective:
“The government publishes both the adjusted and the seasonally adjusted data for many important economic statistics, such as GNP, … money supply… and the unemployment rate. Why seasonally adjust this data? Because seasonal adjustment clarifies the cyclical pattern in the data. thus reducing the probability that an error will be made in interpreting the meaning of changes in the statistics…by using seasonally adjusted data we would not make the mistake of concluding that there ha been an increase in the unemployment rate due to a cyclical change in the economy. The government publishes seasonally adjusted data to help users assess economics developments.” (p.58 Business Fluctuations and Forecasting)
My takeaway? We can’t accept the data when we like it and spurn it when it doesn’t meet our own gut. 80,000 people are happier to have jobs than they did in October. But the economy isn’t zooming back, more people should have been employed based on a typical spike for the holidays. (ok, what do I mean by typical… ask the BLS why don’tcha? 🙂 )
Fact: Unemployment is definitely 17% http://bit.ly/1w6X1J
This last part comes from John Munoz’ excellent dash of US unemployment. To read the article, visit his site above. Now, John points out an economic reality that we don’t always talk about, but labor economists do – the unemployment rate does not count those who have “dropped out” of the workforce because they have been discouraged to. The 17% number is wiggly one (I don’t know what John’s source was, but directionally it’s correct, if not its magnitude). It may over count people that have dropped out that aren’t “discouraged”, but just aren’t going to enter right now (teens come to mind). But I still like the point, and the dashboard a lot.