May 7, 2009
Unemployment Numbers
Unemployment Numbers
It seems my economic forecasting capabilities are about as good as the rest of my fellow economists. The April unemployment rate fell to 5.4%! Can anyone explain this?
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Comments
Just another example of "industry" heads having the letters beside their name but no street smarts. Hope you stood by your convictions and loaded up with BEPPA at 5c a few weeks back. Good old Warren Buffet called it again the other night on CNBC. When everyone's running around panicking, get in there boots and all.
1. A Black Swan event
2. They have to put on more staff to make sandwiches for Kevin Rudd
3. Rubbish in, rubbish out.
I put my bet on No. 3.
Wasnt it Warren Buffet who said that when making share buying decisions you should only spend 10 minutes looking at economic factors and even that is 7 minutes too long. :-)
Statistical Blip definitely. These surveys can only say with 95% confidence that the sample value is the same as the real value. Funny how such a blip comes when the government most needs some positive news!!!
To know the relevance you would also need to know the standard deviation of the estimate.
Probably so. It applies to the previous estimate as well though which was worse than expected (if I recall correctly - and funny how no-one was calling those numbers unreliable . . . ). It is quite possible that the big looking fall was caused by a slight overestimate in the previous period followed by a slight underestimate in the following period. It's probably better to look at the trend over a number of months rather than the individual sample results from month to month.
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