BLS Unemployment Statistics

  1. BLS has released data on unemployment for the month of January.

    What I want to ask about is a blog from Karl Denninger on market-ticker.

    He states that he used the "correct adjustment" and I just wanted to know if it was valid.
    Not sure if this is valid and I am very uneducated on this subject and trying to learn. Just need some input. This is from a very conservative blog, but my question is about the math and method behind the seasonal adjustment. If it's in the wrong forum, I apologize.
  2. jcsd
  3. First- you need to know that the monthly data is an estimate that probably will change with time. The only blip Denninger seems worried about is the people leaving the labor force. That might be revised down.

    Now, Denninger is right in that we need to account for population growth- on average we need to create at least 100k jobs a month to keep up with new people entering the labor force. He is also right that people have been steadily exiting the labor force- as people spent more and more time unemployed eventually they gave up.

    Where Denninger is wrong is that this month was particularly bad- fewer job separations and more jobs openings is ALWAYS better than the opposite. This data IS good news. Now, is it enough? Probably not- at this rate it would take a decade to get back to full employment, which is a long, long time.
  4. To answer your question as directly as possible, no it is not accurate. There is very little more I can say. He is constantly trying to confuse the issue, by throwing out lots of different numbers. Unfortunetly there is no perfect way to judge unemployment, or employment for that matter.
    The simple truth is that the unemployment rate should probably be worse then it is, but not nearly as bad as the U6 number. Looking at the employment ratio is not very accurate either as it doesn't account for how many people are retiring, and in the coming years, as more baby boomers retire, the number should naturally go down from previous rates.
    The number thrown out by the BLS is somewhat accurate, it is the same method they have used for as long as I can remember, so why are they getting mad about it now? Simply because it is not giving them the numbers they want. Overall it does a decent job at flattening out the non-seasonally adjusted spikes and valleys. Is it perfect? Nope, but it is decent.
    As PartcleGrl pointed out, it does not take into account for population growth. Actually I believe her numbers are a little low, I think the real number is about 150k a month (lately), even that might be a little low as some people might be pushing off entering the work force, instead opting to go to college, because of the poor economy. If memory serves me correctly, before the recession it was closer to 175k people entering the workforce each month.
  5. Lowering the unemployment rate is not the same thing as raising the employment rate.

    It does not take into account:
    1. People whose unemployment benefits ran out and stopped looking for work are removed from the unemployment.
    2. People who are working part-time, but aren't really making a livable wage.
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