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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Joe S Pack who wrote (13390)5/7/2004 4:25:37 PM
From: TH  Read Replies (1) of 110194
 
Nat Nithi,

You already have the link. Here is what I found about this model so far. From a Bloomberg article in March.

quote.bloomberg.com

New Model

One potentially significant criticism of the payroll survey concerns the relatively new net birth/death model used to estimate new business formation. While this methodology was shown to be better than its predecessor -- a quarterly bias adjustment factor for new businesses -- the birth/death model hasn't demonstrated its superiority at cyclical turning points.

Once a year, the BLS benchmarks the payroll data to state unemployment insurance data. The birth/death model will be benchmarked once a year as well.

The BLS says the birth/death model is tracking the unemployment insurance data through the third quarter. It's only in the last six months, after the economy reached cruising altitude, that job growth seriously underperformed not only expectations but actual weekly unemployment claims, which are near a three-year low.

``The birth/death model is only as good as your last benchmark,'' says Joe Carson, director of global economic research at Alliance Capital Management. ``The new methodology, while better than the old, has some flaws. It will be slow to capture hiring at critical turning points.''
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