Seasonal adjustment Over the course of a year, the size of the nation's labor force and the levels of employment and unemployment undergo regularly occurring fluctuations. These events may result from seasonal changes in weather, major holidays, and the opening and closing of schools. The effect of such seasonal variation can be very large. Because these seasonal events follow a more or less regular pattern each year, their influence on the level of a series can be tempered by adjusting for regular seasonal variation. These adjustments make nonseasonal developments, such as declines in employment or increases in the participation of women in the labor force, easier to spot. For example, in the household survey, the large number of youth entering the labor force each June is likely to obscure any other changes that have taken place relative to May, making it difficult to determine if the level of economic activity has risen or declined. Similarly, in the establishment survey, payroll employment in education declines by about 20 percent at the end of the spring term and later rises with the start of the fall term, obscuring the underlying employment trends in the industry. Because seasonal employment changes at the end and beginning of the school year can be estimated, the statistics can be adjusted to make underlying employment patterns more discernable. The seasonally adjusted figures provide a more useful tool with which to analyze changes in employment.
Stockman says:
For crying out loud, folks, every December is different — and not just because of the vagaries of the weather. Capitalism is about incessant change and reallocation of economic activity and resources. And now the globalized ebbs and flows of economic activity have only accentuated the rate and intensity of these adjustments.
Yet the statistical wizards at the BLS think they can approximate a seasonal adjustment factor for December that at +/- 300k amounts to just 0.2% of the currently reported 144.2 million establishment survey jobs, and an even smaller fraction of the potential adult work force which is at least 165 million.
But that’s a pretentious stab in the dark. The December seasonal adjustment (SA) could just as easily be 0.3% of the job base or 0.1%, depending upon the specific point in the business cycle and structural trends roiling the economy.
Indeed, these brackets alone would vary the headline SA number by 150k to 450k. The fact that the seasonal adjustment factor for December has oscillated tightly around 300,000 for the last 12 years proves only one thing — namely, that the bureaucrats at the BLS have chosen to invent the same guesstimate year after year; it’s not science, its political fiction.
Stockman is mostly right. The seasonal coefficients would be way off base if were are entering a recession period. In fact they reently ried to fix the seasonal adjustment coefficient, and likely are not even sure they got it right. And aghain, remember, all yhe in stitutional policy changes, like taxes and Obamacare, seem to fall in January, So, we are still awaiting the outcome of Christmas sales. Meanwhile, stock market arou d the world are taking a dive tonight.
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