Guest Post by Jeffrey P. Snider via ContraCorner
The juxtaposition could not be more fitting with all that is transpiring at this moment in economic history. On Monday, the headlines were filled with, Black Friday Fizzles as Sales Tumble 11% and ‘Black Friday’ Fades as Weekend Retail Sinks 11%. Then the “employment” report comes out and now the headlines are, More Jobs and Higher Wages: U.S. Recovery Starts to Hit Home and Hiring Surge Gives U.S. Expansion a Lift Into 2015. The problem is one of mutual exclusivity as both narratives are totally inconsistent with each other even when factoring any kind of shift in consumer buying patterns.
The shopping trend is itself a statistical creation, but one with more raw and basic grounding in actual outcomes. The Establishment Survey is, to put it mildly, one of the most adjusted and calibrated (not to mention revised) figures in the economic calendar. That is especially true of its inclusion of a statistical process called “trend/cycle analysis” and that supposition’s close relation to the plucking model of economic cycles past (and way in the past now). You can obviously tell from just that initial formulation where my sensitivities and inclinations take my analysis.
The problem starts and ends with our current economic circumstances, particularly as it looks nothing like historical experience with other business cycle occurrences. We are conditioned to think these economic statistics are good indications of actual economic condition, but that only applies if the future (or the current) looks like the past where these “rules” were all developed.
The former head of the BLS, who was in that position until 2012, told the New York Post last year exactly that:
All parts of Washington’s data-collecting machine adjust to smooth out the bumps caused by the seasons of the year. But the recession that started five years ago was so severe and the recovery so anemic that the seasonal adjustments have been thrown off.
