Earlier this year, a reporter informed me of what is apparently a common belief in the business press, namely that "the Labor Department considers the (seasonally adjusted, or SA) numbers to be much more reflective of what’s actually going on in the economy" than the raw (i.e., not seasonally adjusted, or NSA) economic data. That's interesting, given that you can't even do seasonal adjustments without the raw data, but I digress. That expressed and almost blind belief in SA numbers explains why virtually no one in the press bothers to look at, let alone report, the NSA numbers.
But given this "seasoned" faith, why didn't the business press tell readers that today's revisions to SA figures for initial unemployment claims going back to 2007 released today by the Department of Labor increased the originally reported amounts for the past four weeks by an average of almost 4%? That's indeed what happened, and it hardly seems minor. Instead, Bloomberg, Reuters, and the Associated Press all celebrated today's number (359,000) as the lowest in four years -- which it will no longer be if it gets revised upward next week by 2,000 or more next week (the average seen during the past year has been a bit below 4,000). The specific changes are after the jump, followed by a rundown of the three wire services' coverage.
Here are the changes:
Claims increased by an average of 3.8% during the past four weeks as a result of the revisions.
At Bloomberg, Lorraine Woellert ("Jobless Claims in U.S. Decline to Lowest Since April 2008"), mentioned the revision's existence, but not its effect:
The number of Americans seeking unemployment benefits dropped last week to the lowest level in almost four years, adding to evidence of an improving U.S. labor market.
Initial jobless claims fell 5,000 in the week ended March 24 to 359,000, the lowest since April 2008, the Labor Department reported today in Washington. The median forecast of economists in a Bloomberg News survey called for 350,000 claims. With the report, the government data also contain revisions dating back to 2007.
... "The labor market is still improving at a modest pace," said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. "Across almost all sectors, companies have shed as many workers as they possibly can. Now, they're responding to the modest improvements in demand."
At Reuters, Jason Lange ("Jobless claims fall to 4-year low in latest week") at least noted that last week went up by 16,000 because of the revision:
New claims for unemployment benefits fell to a fresh four-year low last week, according to a government report that showed ongoing healing in the labor market.Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 359,000, the lowest level since April 2008, the Labor Department said on Thursday.
The report included revisions for claims data from 2007 based on updated seasonal adjustment calculations. New seasonal adjustment factors were also introduced for 2012.
The prior week's figure was revised up to 364,000 from the previously reported 348,000. Economists polled by Reuters had forecast a claims reading of 350,000 for last week.
At the Associated Press, Christopher Rugaber ("US jobless claims fall to lowest level in 4 years") went into the wire service's "everything's coming up rosy" routine:
The number of people seeking U.S. unemployment benefits dropped last week to the lowest level in four years, adding to evidence that the job market is strengthening.
Applications for weekly unemployment benefits fell by 5,000 to a seasonally adjusted 359,000, the Labor Department said Thursday. That's the fewest applicants since April 2008. The four-week average, a less volatile measure, declined to 365,000 - the fewest for that measure since May 2008.
When unemployment benefit applications drop consistently below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate. The decline has coincided with the best three months of hiring in two years.
The department made annual revisions to the past five years of data, which increased the number of applications in recent months and showed a slower decline. Still, even after the revisions, applications have fallen roughly 12 percent over the past six months.
... "The trend remains unambiguously downwards," said Ian Shepherdson, an economist at High Frequency Economics. "We think the rate of decline ... is slowing ... but they are still consistent with robust, sustained payroll gains."
Well Chris, we thought until last week that claims had fallen by almost 18% in the past six months (the difference between last week's original 348K and the 423K reported in the week ended September 17). So the drop you cite is about one-third less, and, to needle Mr. Shepherdson, quite a bit less "unambiguously downwards."
So the press really believes that the SA are the gospel, yet it totally ignored how they went up by almost 4% in revisions during the past month. Their preference for SA numbers would thus seem to have very little to do with faith. I suspect it instead involves a high component of laziness -- and in the case of today's DOL revisions, the need to ignore news that makes the economy look a bit worse than it has appeared during the past month trumped the need to report bad-news changes in the numbers they claims they trust.
Cross-posted at BizzyBlog.com.
