Tuesday, November 11, 2008

Jobs: In Case You Haven't Heard

Jobs are dropping like the temperatures outside: for the record, October's jobs losses were worse than expected (-200K), coming in at -240K. But the real kicker, something the mass media might not have covered too well, was found in the September revision. Recall that September's Jobs data showed a negative -159K. Well, that number was revised to -284K! I would have to think, given the size of the September revision, that October's -240K will be revised to near -300K.

Why the discrepancy in the numbers? Remember that the jobs numbers are based on econometric models: the "revised" figures are based on the "hard evidence". What this tells us is that the assumptions used in the econometric models are faulty: past performance cannot be used to predict a new reality.

The job losses are beginning to accelerate, and that's a spiral that's difficult to come out of.

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