{"id":2803,"date":"2011-01-07T07:31:22","date_gmt":"2011-01-07T14:31:22","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=2803"},"modified":"2018-08-16T17:28:26","modified_gmt":"2018-08-16T21:28:26","slug":"december-unemployment-situation-better-not-best","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2011\/01\/07\/december-unemployment-situation-better-not-best\/","title":{"rendered":"December unemployment situation, better, not best"},"content":{"rendered":"<p><span style=\"font-size: 16px;\">Good morning\u00a0everyone.\u00a0 I hope that this post finds each of you doing well!<\/span><\/p>\n<p><span style=\"font-size: 16px;\">The Department of Labor announced just a short while ago the following data about the U.S. unemployment situation:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">Private sector jobs up 113,000 vs. expectations of 150,000 jobs to be created<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Unemployment rate down to 9.4% vs. an expected rate of 9.7%<\/span><\/li>\n<li><span style=\"font-size: 16px;\">November private sector jobs revised up to 71,000 from 39,000<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\"><strong>Analysis:<\/strong> I&#8217;m going to take these data in order.\u00a0 That the private sector added 113,000 jobs in December is a good thing.\u00a0 However, what is not a good thing is that the number missed expectations by a significant amount, 24.7%.\u00a0 Economists also conduct their own surveys to derive their data.\u00a0 This data is notoriously prone to revisions.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">As a financial analysis tip, note that all of the data I am talking about are round numbers &#8211; 113k, 150k, 39k, 71k &#8211; I am not rounding the data, the data reporters are.\u00a0 That is always a sign of estimated data.\u00a0 Therefore, these data always have to be taken cautiously.\u00a0 I tend to think of data like this as a &#8220;coming into focus&#8221; situation.\u00a0 The more the data analyzers look at it, the more into focus the data will become.\u00a0 But how long does that take?\u00a0 Many months.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">That second piece of data, the unemployment rate falling to 9.4%, the lowest level in 19 months, is evidencing\u00a0a conundrum I have talked about on the blog before.\u00a0 How can it be that the same economists who expected 150,000 jobs to be created also only expected a drop in the unemployment rate to 9.7%, whereas the actual data show fewer jobs added, but a more sizable drop in the unemployment rate?\u00a0 At first glance these statistics would seem to contradict one another and be impossible.\u00a0 Here&#8217;s how this happens&#8230;<\/span><\/p>\n<p><span style=\"font-size: 16px;\">First, the above data are gathered from two separate surveys.\u00a0 So the surveys don&#8217;t necessarily have to coordinate in a mathematical, causality sort of way.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Second, the unemployment rate only counts those folks who are looking for work.\u00a0 Thus, if a job seeker becomes very discouraged and stops looking she or he is excluded from the data.\u00a0 That is clearly one of the things that has happened here that helps to reconcile the conundrum.\u00a0 But those unemployed folks will eventually start looking again at some point in the future; after all, they have to eat!\u00a0 When those folks start looking for work again they will add pressure to the unemployment rate figures all over again.\u00a0 So this data, the unemployment rate, is something that will be difficult to bring down and to improve.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Let&#8217;s summarize what we have so far.\u00a0 One statistic, the number of jobs added, missed expectations; a bad thing.\u00a0 The second statistic, the unemployment rate, also is demonstrating a bad thing, people are dropping out of the job market entirely.\u00a0 But what about that third statistic, the November revision?<\/span><\/p>\n<p><span style=\"font-size: 16px;\">November&#8217;s revision is the most important component of what was reported today.\u00a0 The reason is that, when combined with the trajectory of other jobs data revisions lately, it clearly indicates an upward trend.\u00a0 When all of the revisions are upwards it means that surveys are consistently under-counting.\u00a0 It also is a strong indication that the job adds are happening at smaller businesses that are slower to report and likely missed by the big surveys.\u00a0 That means the small &#8220;mom and pop&#8221; businesses are hiring.\u00a0 And that typically means retail-type businesses.\u00a0 And (still with me?) that means that consumers are spending more money.\u00a0 This is the silver lining in a disappointing report.<\/span><\/p>\n<p><span style=\"font-size: 16px;\"><strong>Importance grade:<\/strong> 8; I am lowering the importance grade on these data because it is my intuitive sense that the labor market is not only mostly stabilized, but improving.\u00a0 That is, the magnitude of job creation (103,000 jobs added) may be less than expected, but it is still strongly positive.\u00a0 Second, all of the revisions lately are upward &#8211; a very strong sign.\u00a0 So the jobs data is becoming less important &#8211; a very good thing.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Good morning\u00a0everyone.\u00a0 I hope that this post finds each of you doing well! The Department of Labor announced just a short while ago the following data about the U.S. unemployment situation: Private sector jobs up 113,000 vs. expectations of 150,000 jobs to be created Unemployment rate down to 9.4% vs. an expected rate of 9.7% [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2803","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2803","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=2803"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/2803\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=2803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=2803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=2803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}