… or more precisely: ‘tis the seasonality.
For a couple of months, we’ve been pointing out that something smelled fishy about the Fed’s employment reports.
Too much of the good news seemed to be directly tied to statistical tweaks of the the raw data called “seasonal adjustments”.
In fact, the Feds have been goosing the numbers up by more then they used to.
Well, now the Wash Post is even on the case.
The Post article — “Mild winter may have artificially inflated jobs data, economists fear“ – suggests that we may have been underestimating the effect.
Economists are now saying that the mild winter has artificially inflated job growth.
Translation: The surge in hiring early in the year may not be as strong as it appeared.
The warm weather meant more jobs for construction workers and retail employees.
For economists, it means a statistical nightmare.
Typically, these bumps in demand are evened out through a process called seasonal adjustment.
That allows researchers to compare one month’s economic activity with the next for a more accurate picture of the nation’s health.
But this year’s weather was so abnormal that those models fell short, and economists are now scrambling to figure out how much of the growth over the past three months was simply due to a glitch in their systems.
“When the weather does not follow a normal seasonal pattern, then the seasonal adjustment cannot adjust for it.”
And that may help explain why recent data on jobs have looked rosier than actual economic growth would suggest.
Forecasts for the nation’s gross domestic product during the first quarter hover around 2 percent, a middling number at best.
Somewhere there is a disconnect, and Mother Nature is a valid scapegoat.
The labor market boost from the mild winter will eventually even itself out, though it may mean dips in job growth in coming months
Glad to see the mainstream media catching up with the Homa Files and its loyal readers …