As I mentioned on Fri., there is always concern about how the US government does seasonal adjustments for the monthly unemployment report. As always seems to be the case, Alan Abelson of Barron's has a viewpoint worth mentioning:
"According to John Williams at Shadow Government Statistics, the BLS' fiddling with the figures via what he calls 'seasonal-factor games' actually created 200,000 phantom jobs last month. John cites such finagling as the reason his prediction of an October decline and a rise in the jobless rate was wrong. It also explains why seasonally adjusted payrolls were revised upward by 110,000 in September including 56,000 in August.
As we've observed before, those seasonal adjustments sure are magical: They can make it snow in the Sahara and be hot as blazes in the middle of winter in Siberia."
Abelson, Alan, 2010. Is the crowd wrong on qeII? Barron's, Nov. 6.
While I do think quantitative easing II will increase stock and bond prices, investors should not read too much into the apparently favorable Oct. unemployment report as a reason to buy securities. There are too many mathematical aspects that appear to be sketchy.
Further, there was a big divergence between the jobs report and the household
employment survey. The latter showed a dramatic drop of 330,000 compared to the payroll survey, which had a 151,000 gain!
Which measure is right?
For years there have been significant divergences between the two most publicised measures of unemployment published by the government. After all of this time ... one would think that the government would conduct a detailed reconciliation with the goal of publishing one, accurate number. Time goes on and this never happens!
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