Two Views of the Jobless Number
May 3, 2014 at 11:19 pm
From a front of the business-section news article in Friday's Times:
We obsess far too much on the Labor Department's monthly jobs report....But what if all the worries were based on nothing more than random statistical noise? What if the apparent decline in job growth came from the inherent volatility of surveys that rely on samples, like the survey that produces the Labor Department's monthly employment estimate?...When traders put too much weight on data that can mislead, the stock market can soar or swoon for no good reason. Business executives may make decisions based on economic trends that don't exist. And journalists risk giving their readers or viewers a misleading view of where things stand in the American economy.
Human beings, unfortunately, are bad at perceiving randomness. If you go to a baseball game and watch a commanding performance by your team, it tells you very nearly nothing about how the team will perform over the course of a season. Similarly, one month of jobs numbers doesn't tell you much of anything about how the economy is actually doing....it's worth remembering that no one report can neatly summarize the health of a $17 trillion economy of 300 million people, certainly not in something close to real time.
At 8:30 a.m. on the first Friday of any given month, we all actually know a lot less than you might think. The closest thing to an accurate description of the economy's condition is a description that comes with a lot of humility.
From an above-the-fold, front-page news article in Saturday's Times, headlined "Jump in Payrolls Is Seen as a Sign of a New Optimism":
American businesses appear to be increasingly confident about hiring new workers.
In the best monthly showing in more than two years, employers added 288,000 jobs in April, the Labor Department said on Friday, representing three consecutive months in which payrolls grew by more than 200,000. The report, combined with other recent data, suggests the economy is poised to expand at a faster pace in the coming months, after a slow start in the depths of winter.
The "humility" that the Times suggested on Friday was called for was difficult to detect in the Saturday article, which skated awfully close to the "journalists risk giving their readers or viewers a misleading view" territory that the Times warned about in the Friday article. The Friday article was a product of "Upshot," the new David Leonhardt-led Times attempt to do what Nate Silver and Ezra Klein are doing elsewhere, but the juxtaposition of it with the Saturday article shows the dangers of trying to make thoughtful journalism into a separate standalone unit rather than an integral and integrated part of the entire news report.
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