To: Tenchusatsu who wrote (274708 ) 2/15/2006 1:57:31 PM From: tejek Respond to Another take on the economy......one that I think makes more sense:Connect the Retail Sales Dots in Data Analysis | Economy | Federal Reserve | Retail However, the writer goes astray here: My divergement from the standard reporting is based on their fundamental misunderstanding of how BLS reports data, and what it actually means: Citing the the January sales data as a sign of hiring is simply a fundamental misunderstanding of what seasonal adjustments are. In actual numbers, the economy lost 2.625m jobs in January. When the BLS runs the data through their meat grinder, they seasonally adjust them them to a +193k. I have no problem with that, as it makes sense for BLS to present the seasonal adjustments this way. (You can see more details on the NFP and Unemployment data here). However, financial reporters should be savvier, and realize that 193k jobs were no more created in January then were Enrons' profits created in Q1 2000. Its an accounting adjustment (Only Enron's were fraudulent, while the BLS data is real -- just seasonally adjusted). Further, the unemployment rate drop has been fully explained as a drop in the Labor Participation Rate, and note an actual decrease in the number of people looking for work. But note how putting those two adjusted data points together creates a very false read of the strength of the economy. Its an awesome sucker play, and helps set up the eventual top. "Ms. Wells of the retail federation and other economists cautioned that two primary drivers of January's sales growth -- balmy weather and gift-card purchases -- will likely evaporate this month, particularly after a blizzard last weekend snowed in consumers throughout the Northeast. Discount chain Target Corp. yesterday said colder weather will hurt February sales and that it now expects sales of stores open more than a year to climb 2.5% to 3.5% in February, down from its previous prediction of 2.5% to 4.5% growth. bigpicture.typepad.com
