Is Karl Denninger's Correct Adjustment Method for Analyzing BLS Data Valid?

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People who have a college degree, but are working for minimum wage. (still considered employed)4. People who have a job, but are underemployed.5. People who are working below their skill level.6. People who are working for a lower income than they were before.7. People who have given up looking for work altogether.In summary, BLS has released data on unemployment for the month of January, showing that nonfarm payroll employment rose by 243,000 and the unemployment rate decreased to 8.3 percent. While there are concerns about people leaving the labor force, overall job growth was widespread and the data is considered good news. However, there are differing opinions on the accuracy
  • #1
Museigen
BLS has released data on unemployment for the month of January.
Nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent. Job growth was widespread, with large gains in professional and business services, leisure and hospitality, and manufacturing.
http://www.bls.gov/news.release/pdf/empsit.pdf

What I want to ask about is a blog from Karl Denninger on market-ticker.
http://market-ticker.org/akcs-www?singlepost=2858099

He states that he used the "correct adjustment" and I just wanted to know if it was valid.
But the correct adjustment is to look at the population increase and subtract that back off as well.

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.
 
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  • #2
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.
 
  • #3
Museigen said:
BLS has released data on unemployment for the month of January.

http://www.bls.gov/news.release/pdf/empsit.pdf

What I want to ask about is a blog from Karl Denninger on market-ticker.
http://market-ticker.org/akcs-www?singlepost=2858099

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.

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.
 
  • #4
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.
 
  • #5


I am trained to evaluate data and evidence objectively. In this case, the BLS unemployment statistics for the month of January show a decrease in the unemployment rate to 8.3%, which is a positive sign for the economy. The increase in nonfarm payroll employment and job growth in various industries further supports this trend.

In regards to the blog post from Karl Denninger, it is important to consider the source and potential bias. As a conservative blog, there may be a tendency to interpret data in a way that supports a certain viewpoint. However, it is always important to question and analyze information, regardless of the source.

In terms of the "correct adjustment" mentioned by Denninger, it is not clear what specific adjustment he is referring to. The BLS uses a complex seasonal adjustment process to account for fluctuations in employment due to seasonal variations, such as holidays or weather. This is a standard method used by many organizations and is continuously reviewed and updated for accuracy.

Overall, it is important to critically evaluate information and consider multiple sources before drawing conclusions. I encourage you to continue learning and questioning to gain a better understanding of complex topics like unemployment statistics.
 

FAQ: Is Karl Denninger's Correct Adjustment Method for Analyzing BLS Data Valid?

What is the BLS Unemployment Statistics?

The BLS Unemployment Statistics, also known as the Bureau of Labor Statistics Unemployment Statistics, is a monthly report released by the US Department of Labor that provides data on the labor market, including the unemployment rate, employment levels, and job growth or loss.

How is the unemployment rate calculated?

The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force, which includes both employed and unemployed individuals. The resulting percentage represents the portion of the labor force that is actively seeking employment but unable to find it.

What is the current unemployment rate?

The current unemployment rate can vary depending on the latest BLS report. As of October 2021, the unemployment rate in the United States was 4.6%, according to the BLS Employment Situation Summary.

Why is the BLS Unemployment Statistics important?

The BLS Unemployment Statistics is important because it provides valuable insights into the state of the labor market and economy. It is used by policymakers, economists, and businesses to make informed decisions about employment, wages, and economic policies.

What are some limitations of the BLS Unemployment Statistics?

While the BLS Unemployment Statistics is a widely used and reliable source of data, it does have some limitations. For example, it does not capture discouraged workers who have given up looking for work, and it may not accurately reflect the unemployment rates for certain demographics, such as youth or people with disabilities.

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