Comments on: NFP: Retiring the Over/Under Bet

By: Econbrowser

Econbrowser — Sun, 05 Nov 2006 14:05:08 +0000

Using those employment numbers

What do you do when one line of the latest government statistical release says that U.S. employment grew by 92,000 jobs during October, while 4 paragraphs later the same report gives the number at 437,000?

By: Cherry

Cherry — Sat, 04 Nov 2006 22:49:58 +0000

E, real growth was strong through the first half of the year. The 3rd quarter(late summer, early fall) was the first “sluggish” indicator that things like employment growth will be falling, but it takes time, though things are hard to restart again when they do come to a complete stop and contract.

By: diva

diva — Sat, 04 Nov 2006 05:45:50 +0000

Yep
I ‘told you so’.

(Sorry, couldn’t resist.)

By: Eclectic

Eclectic — Sat, 04 Nov 2006 04:20:10 +0000

While no single observation that is small enough to be within the limits of statistical error (and thus of no assured significance) may mean anything at all, cumulative observations that exceed those limits are significant.

In other words; a single change in the number of jobs that is within plus or minus 430k may not mean much, but a cumulative change of, say, 1 mil jobs does.

I haven’t said that the economy hasn’t produced jobs or that it won’t continue to do so, because it has so far. There is a statistically significant difference between, say, 134 mil jobs and the current 137 mil as measured by the BLS.

Those who claimed 6 months ago that the economy would continue to expand and produce jobs have been correct so far (I thought not and I’ve been wrong), because we can now measure a significant change that proves it.

To be fair to BLS, it’s not the agency itself that takes the estimates and claims accuracy from them… it is the pundits who desire to spin the figures they produce in some light that supports their point of view.

Consequently, if it had only produced 20,000 jobs instead of the 92k, they’d still attempt to spin it as being evidence the expansion will continue.

An economy slowing from 3 plus percent GDP to 1.6 is not consistent with employment growth, however if the economy continues to slow (as Roubini is rather poetic about claiming), when employment does begin to decline, we can’t be sure that it will be proven in any upcoming particular monthly observation.

By: A Dash of Insight

A Dash of Insight — Sat, 04 Nov 2006 02:47:57 +0000

An Open Note to Steve Liesman

Steve Liesman is a fine journalist. He is not an economist, but he has covered the economic beat long enough to understand the key issues. He can be depended upon to listen carefully and distill the key points of analysis

By: blam

blam — Fri, 03 Nov 2006 23:27:27 +0000

Thanks to Eclectic for putting the whole thing in mathematical perspective. Now could someone please explain it to the hype machine. The jobs number has taken on the import of a real number.

The agency is at fault for announcing a number as if they can measure whether thre has been a change in jobs from the previous month. By ommission, they infer accuracy and precision of the estimate, when in reality, the number is always zero or no change.

By: Eclectic

Eclectic — Fri, 03 Nov 2006 23:00:44 +0000

“But they put out the number as if it means something, and then are surprised that people cling to it.”

A foolish consistency is the hobgoblin of little minds.
–Emerson

By: Eclectic

Eclectic — Fri, 03 Nov 2006 22:26:55 +0000

“Eclectic, you’re correct, strictly speaking. However, they DO release their central value of, let’s say, 92,000 as if it matters.”

No, Alex Khenkin… it doesn’t matter at all. No more than if I elected to have you count sheep and you claimed an accuracy greater than .0006; that’s just 6 sheep in 10,000.

[92/430 times .003] = .00064

Who would be the greater fool… me, for believing your accuracy, or you for claiming it?

By: Eclectic

Eclectic — Fri, 03 Nov 2006 22:13:13 +0000

Fate is a cruel taskmaster.

By: Alex Khenkin

Alex Khenkin — Fri, 03 Nov 2006 20:54:58 +0000

Eclectic, you’re correct, strictly speaking. However, they DO release their central value of, let’s say, 92,000 as if it matters. Psychologically, it is hard to put that number away and pay attention to the probable range, unless that range is given more prominence. It’s like the average temperature on the Moon – no one in the right state of mind would even mention the average when the range is between -150°C and +100°C, or some such. But they put out the number as if it means something, and then are surprised that people cling to it.
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