Thursday, May 14, 2009
Sorry About That
If anyone has tried JS-Kit and had good luck with it, let me know.
On employment: This week's initial claims report was negative due partly to seasonal adjustments. However, the seasonal adjustment really isn't that skewed. Officials said that part of the upward jump in initial claims was due to the Chrysler problems, but they did not say how much. Regardless, the Chrysler and GM problems are real and will result in long-term unemployment jumps. The prior week's initial claims were also revised upward.
Current NSA continuing claims stand at 6,166,785 versus the prior year's 2,845,952. That is an increase of about 3,300,000 - more than double. Initial claims rose by 27,856 on an NSA basis, and 32,000 on an SA basis. We are a long way from a turn in employment. I'd hope for a slackening in the rate of increase, but unemployment probably will continue to increase for another year. I think small businesses and service industries will continue to shed jobs for some time to come. There will also eventually be a cutback in state and local government employment, and that will slowly build.
There were a few comments I wanted to make about the monthly employment report to put that in perspective. And this is for you, Mark.
First, the error bar on the monthly household survey and the calculated unemployment rate is very high. Straight from the technical notes:
For example, the confidence interval for the monthly change in total employment from the household survey is on the order of plus or minus 430,000. Suppose the estimate of total employment increases by 100,000 from one month to the next. The 90-percent confidence interval on the monthly change would range from -330,000 to 530,000 (100,000 +/- 430,000). These figures do not mean that the sample results are off by these magnitudes, but rather that there is about a 90-percent chance that the "true" over-the-month change lies within this interval. Since this range includes values of less than zero, we could not say with confidence that employment had, in fact, increased.The BLS survey is a very high quality survey, but all such surveys have their limits. The household survey is quite volatile month-by-month, and that is because of the broad survey 90% confidence range in comparison to the actual changes reported. Quarterly results are far more certain. A two-month result could give a higher degree of certainty.
Given that temporary employment agencies were reported quite negatively last month in the establishment survey, and that the number of long-term unemployed rose, and that retail employment was reported down again, I'm a bit skeptical. Hopeful, but skeptical. We know there was substantial Census hiring over the last few months, but unless the B/D model is overly negative at this point, it's hard to see how the total number of employed could have risen anywhere close to that much.
Having written that, I do think that number is likely to be close to true. I think the B/D model is underreporting financial/credit intermediation employment in April. But that's only a guess, and it should be taken as such.
Any marginal improvement in the total number of employed this spring is likely to be swamped by the knock-on effects of the Chrysler/GM fiasco this summer, and the likely effect of state and local government job attrition is due to snowball over the next year. This is an absolutely huge segment of total jobs.
For an excellent look at the situation in the government jobs market, please see Rebecca's post on the topic.
We're just getting started on teacher layoffs in Washington State.
Pink slips go out to teachers across"The Washington Education Association estimates when you factor in retirements and provisional contracts, the state could lose 2,500 teaching jobs."
Thanks for the info on the error in the household survey. That really does put it all in perspective.
Oil alone would guarantee it. However, to date it hasn't really hit the stores. Wheat (flour, bread) was the first thing I saw move up over the last couple of weeks.
I am watching the planting reports in great suspense. I'm not too happy about wheat.
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