[lbo-talk] Trusting the BLS job numbers...

Paul Bartlett aurora2050 at gmail.com
Sun Apr 3 19:19:34 PDT 2011

You can you can play around with seasonal adjustment Moving Average (MA) models using the open source program Grelt with X-Tramo the Census Bureau's seasonal adjustment program, which is quite sophisticated. http://gretl.sourceforge.net/x12a/x12a.html

You will of course want to use unadjusted data, generally the more years the better. BLS probably has some differences with the Census in their customizations regarding specifically employment hiring behaviour. I would like to hear from Doug the differences of using CPS data (household survey) from BLS data. I would assume that BLS is better in employment data, and CPS might be better at characterizing the unemployed.

The recession large drops does make it difficult to model, so you may want to put in some dummy variables for the important months of the crashes, which is best to be seen as exogenous shocks unless you want to spend the next six months making a complex model of employment with the finance sector. But I am a novice in Time Series econometrics, so would like to hear what others have to say.

On Sun, Apr 3, 2011 at 4:22 PM, SA <s11131978 at gmail.com> wrote:

> On 4/3/2011 2:50 PM, 123hop at comcast.net wrote:
> I read this comment on Naked Capitalism
>> "A couple of things about last Friday’s job report. The seasonally
>> adjusted increase was 216,000. The unadjusted number was 25,000. What this
>> comes down to is how much you trust the BLS’ modeling of what is happening
>> in the economy. My own impression is that it is assuming we are in a fairly
>> standard recession-recovery cycle. I don’t think this is the case. The
>> recession wasn’t like anything we have seen since the 1930s. And a common
>> complaint I make is that no economists are looking at the economy as a
>> kleptocracy or in kleptonomic terms. So the BLS modeling assumptions are
>> almost certainly wrong as regards job creation.
>> Also as I have said, we need to look for corroboration for the BLS stand
>> on job creation. We should be able to find this in two places. The first is
>> in our everyday experience. If the job situation is improving, then we
>> should begin to see more local stories about more hiring and new businesses.
>> The second is in other statistics that the government keeps such as hours,
>> wages, capacity and capacity utilization, and tax receipts. I don’t see in
>> either of these evidence that there is a lot of new hiring going on.
>> Put simply in the absence of corroborating evidence I would question the
>> reliability and accuracy of this BLS jobs number."
> The writer misread the numbers. The seasonally unadjusted increase was
> 925,000, not 25,000. The seasonal adjustment pushed the increase down, not
> up - as it always does for March. As the weather gets warmer, people do more
> things. As they do more things, the economy adds jobs. If you don't strip
> out these seasonal fluctuations - for weather, Christmas, summer vacations -
> you will always think the economy is crashing in January and booming in
> March.
> I like the Sara Palinesque suggestion that we shouldn't trust the numbers
> if they conflict with "our everyday experience."
> SA
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