Sunday, December 07, 2008
Elastic numbers
If you get a few paragraphs into the NYT's coverage of our terrible job loss figures, you'll see this:
As part of Friday’s announcement, the government revised higher its estimates of jobs lost in September and October. Instead of 524,000 jobs disappearing in those months, 723,000 were lost, or a total of 1.2 million jobs in just three months. In all, jobs have been lost in each of the last 11 months.Why the funny numbers? Why were we told that the sitch was better than it actually was? How do such things happen?
Joe, may I presume that those are somewhat rhetorical questions?
If so, I will respond with a rhetorical question of my own:
When did the U.S. Government ever tell the truth about anything?
If so, I will respond with a rhetorical question of my own:
When did the U.S. Government ever tell the truth about anything?
The announced unemployment figure is an artifact of a model known as job 'birth and death.'
The number of jobs 'lost' is far better sourced to factual, officially reported numbers. The number of jobs 'born' is an estimate from historical trends, since there isn't any official mechanism by which new jobs created get reported to anyone.
My understanding is that the putative job 'birth' rate has been pegged at approx. 150,000 in these past months, and as better survey information becomes available after the reporting period is over, the revisions (typically downward in this economy) are used to revise that prior monthly number.
So, the numbers are always adjusted because this methodology is always in play. Because of the job environment in this free-falling economy, these adjustments will always be in the direction of fewer jobs, and more unemployment.
XIslander
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The number of jobs 'lost' is far better sourced to factual, officially reported numbers. The number of jobs 'born' is an estimate from historical trends, since there isn't any official mechanism by which new jobs created get reported to anyone.
My understanding is that the putative job 'birth' rate has been pegged at approx. 150,000 in these past months, and as better survey information becomes available after the reporting period is over, the revisions (typically downward in this economy) are used to revise that prior monthly number.
So, the numbers are always adjusted because this methodology is always in play. Because of the job environment in this free-falling economy, these adjustments will always be in the direction of fewer jobs, and more unemployment.
XIslander
