Saturday, 11 January 2014

Phony US Unemployment Stats Revealed in Two Line Chart. Canadian Puzzle: How do you apply this?

Political stats attract lies like a cow-pie brings flies. Published EI stats (and CPI stats) are always misleading. Their aim is to persuade, not inform. The US chart shows the published unemployment rate has been declining but the whole time the percent of people out of work has stayed flat and high. Canadian numbers say the same on a smaller scale.  The unemployment rate has gone down but fewer able people are working. We are less discouraged since only half as many people have dropped out percentage-wise.
US numbers from with hat tip to Instapundit.

A reminder, stats are slippery.  The partisans who put a spin on a story know what they don't want you to think about but probably don't understand the economy either.  The participation rate is seasonal.  The size of the potential work-force changes with births, immigration, death and retirement and even rules about pensions.  When couples prosper, dropping out can be win-win for  wife and husband.  It's regional and varies from rural to urban areas too.  Robots may be a better deal than talented willing workers. And so on.  When I see a simple number, I want to see how to drill down for detail.
Canadian participation is seasonal.

Canadian participation quarterly.
Canadian unemployment with both a seasonal and a regional tweak.

Underlying data for US chart above.
For detailed interpreting of employment stats, see Mish Shedlock at Globaleconomicanalysis.

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