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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (11398)	9/3/2004 4:11:53 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Birth Death Model bls.gov The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend. BLS will continue researching alternative model-based techniques for the net birth/death component; it is likely to remain as the most problematic part of the estimation process. =================================================================== No S**T The problem is compounded my attempting to equate this recovery to past recoveries that did not have macro factors in place today. Past recoveries did not have to deal with worldwide labor gluts and an internet in place that easily lets service work, call centers, and technology work EASILY moved to remote locations outside of the US to the low cost bidder. Their "model" could not possibly factor that in because it did not exist in past recoveries. Their model probably does not factor in the steady continuous loss of manufacturing jobs to China. I question whether or not it properly accounts for increasing productivity as well. Even China is losing manufacturing jobs because of technology improvements. I doubt their model understands the changing dynamics of the housing situation in the US, with bank consolidations and with a mortgage refinance business that has fallen to the floor. Finally, their model remains unapologetic about the quality of jobs it is ASSUMING that is created. One can look at the huge numbers of people working part time for economic reasons to know that this recovery is unlike any other. One can look at wage growth and compare this recovery and see it is unlike any other on record. So why are we attempting to use birth/death model adjustments with all these problems and differences? Other than politics, is there any justification for it? Mish