Quote:
Originally Posted by TorpX
I'm not impressed. This is like when they tell us that inflation is low, but the numbers do not count food or energy because they are too "volatile". This makes perfect sense if you do not eat and live a pre-industrial lifestyle.
Also:
http://www.bbc.co.uk/news/business-12940054
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Indeed. The figured have been monkey with so much that to say they're an accurate census of everyone who's employed or unemployed is not true. A lot of what's used is estimation and statistical modelling.
What the value of the numbers is is that they're data points in a longer series. The news media latches on to each month's release like it's a huge deal, but ignores the context of the data. It's as if someone were telling you a story one word at a time, one a month. You wouldn't focus on the individual word so much as you would look at what came before it so as to form a sentence. So it's more important to say that 8.8% this month is less than 9.8% last month than to scrutinize 8.8% and say the true rate of unemployment is...say 8.9% or 10% of 15% or whatever instead. If you calculate the number using the same methodology as you used last month, you'll track the general trend of the economy and as they say in my business, the trend is your friend.
There's also the case that total employment is sort of a lagging indicator in the economy. Businesses generally don't hire new workers until economic conditions have improved enough or are expected to improve enough in the near term to warrant adding workers. But that's not to say that there's no forward looking data in the non-farm payrolls report either. Hours worked and temporary hours worked are a good indicator of the future direction of the economy - businesses adjust the hours their workers are scheduled for, or will bring on temps before they go to the expense of hiring or firing permanent employees. Income is another good one - if the labor market is slack, then employees don't have as much leverage to demand raises. They can be replaced with someone who's out of work and willing to do their job at their old rate. Conversely, if you see income increasing, it means that the labor market is tighter and employers are more willing to pay up to keep the employees that they have.
So there's value in the data. It just takes a little digging and thinking for yourself, rather than swallowing what the news media feeds you.