Seasonal adjustment

Floyd Norris points out that the jobs report that caused so much gnashing of teeth last week was actually pretty positive and may be a sign the economy is really turning around.

At least for some people.

In reality, the government report says unemployment rates remained steady at 9.5 percent. And the number of jobs actually rose, by 80,000. And the number of jobs for college educated Americans rose more than in any month in the last six years.

If those were the numbers in the articles, we would hear about the economy stabilizing, and talk about the Obama stimulus plan starting to have the intended effect.

So why is this the first time you’ve seen those better-looking numbers? It is because the government adjusted them before they were released.

The adjustments are for seasonality. For some reason, October is the month with the largest seasonal adjustment down in jobs. So the increase in the unemployment rate does not reflect people actually losing jobs. It reflects the belief that seasonal factors should have added more jobs than they did.

All this may be very reasonable, and there is no way I can think of to test whether the seasonal adjustments are reliable. But I suspect seasonal factors are less important this year, when the economy may be changing directions, than they normally are.

Studying the unadjusted numbers provides some indication that the hiring is starting to improve for better jobs. The number of jobs for college graduates, according to the household survey, rose 755,000 in October, before seasonal adjustments. That is the third-largest increase since the government started counting those figures, in 1992. (It trails increases of 895,000 in February 2002 and 755,000 in October 2003.)

On the other hand, the number of jobs fell for those with less education. If this report does indicate that the job recession is ending, it is an end that is providing immediate benefits for the educated, not for many of the people who most need help.