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Bank Of America's Ethan Harris Explains The Birth Death Adjustment
Yesterday Zero Hedge pointed out that in addition to the 54,000 NFP number missing every single economist estimate, another very troubling statistic was that the BLS added some 206,000 "jobs" courtesy of its monthly birth/death adjustment: numbers which tend to be added on a monthly basis and then subtracted (especially during periods of economic contraction) in one annual benchmark revision which is largely ignored by everyone. In fact, as Peter Tchir pointed out, over the past 4 months, the NFP has added 752k jobs, of which 610k have been birth death jobs. B/D has added 271K jobs YTD in 2011, 510K in 2010, 585K in 2009, 825K in 2008, 883K in 2007, 1002K in 2006, etc, in in the last decade has never once subtracted from the full year tally, which would subsequently be revised lower. You get the picture. Well, yesterday, Bloomberg's Tom Keene sat down with Bank of America chief economist Ethan Harris, who just like every other Wall Street economist has been clueless on the direction of the economy in 2011, and asked him to explain just what the B/D model is, why it exists, and whether it represent data manipulation. The relevant segment begins just over 5 minutes into the clip below.
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Ima adjust my package and describe that because it has about the same relevance to the real world of employment
What the hell is the matter with that old man's voice? He sounds like Chrissy Matthews but on steorids.
A bigger problem is the shaky camera method they decided to use to broadcast business news - makes you think Jack Bauer might jump from behind one of those monitors. That, and the preference of showing charts by pointing a camera at another screen for the fuzzy effect.
I guess they figured they need to make biz news more exciting and engaging.
He said "soft patch".
Seems to be meme.
Is this something like dry spell ?
Probably just a transitory period until the masses understand the brilliance of the Fed's policy adjustments and spend money they don't have for things they don't need again.
I am agreeing with soft Patch.
The question is "how soft?".
I am thinking "quicksand".
"quicksand" economy - pretty good. I like it.
The more that you thrash around trying to get out, the deeper you go.
TPTB will continue to speak jibberish as long as we let them. The birth/death model is used as much as possible to hide the truth. When you claim that there are 700k new jobs and 600k are due to the birth/death model, then anyone awake knows exactly what is going on............................
And another question.. which I have asked many times before to various people and got pathetic replies (not ZH of course)... why does the 'market' take any notice of 250 to 500 telephone call responses to CONsumer sentiment??
Forget about Fukushima.
Those 350 consumers, boy, they make world go round.
So you better don't mess with them, cause they are key, man !
Total softball question, unbelievable, yet so believable. Nothing about year end adjustments...Douchebags the both of them.
You put your birth foot in,
You put your birth foot out;
You put your birth foot in,
And you shake it all about.
You do the Hokey-Pokey,
And you turn yourself around.
That's what it's all about!
You put your death foot in,
You put your death foot out;
You put your death foot in,
And you shake it all about.
You do the Hokey-Pokey,
And you turn yourself around.
That's what it's all about!
luv it Bugs! +++++++++++++++++++++++++++++++++++++++
You got a shout out, Tyler. Be careful.
Ethan is running scared. (ETHAN should be planning a summer vacation).
2 keywords here:
-assumption
-Tyler Durden
LOL
Run hard COPPER! TYLER is spoton! Oh did I miss a SPOT?
Hey check out the (XLF) .
Later in the program, Keene talked with McKee of Bloomberg, who disputed Tyler's computations. He said that BLS adds the birth death estimate to an unadjusted/seasonal number whereas ZH had added the birth/death to an "adjusted" number - or something to this effect, implying that ZH was wrong!
Would appreciate some more analysis of this to get a grip on what this number actually means, and whether it is accurate or useful. Ethan said in the video that BLS has been trying to get it right for years - evidently without much success!
what is there to know? government statistics says it all...to quote Mark Twain:
"the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and government statistics."
I encourage to research your own question since it makes no sense. Try Google.
From http://www.bls.gov/web/empsit/cesbd.htm. Note that there are TWO components to the B/D model, one of which IGNORES the "deaths". This number is not published or reflected anywhere...
http://www.bls.gov/images/gray_round_bullet.gif); color: #333333;">
- Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses from business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the net birth/death employment.
- The second component is an ARIMA time series model designed to estimate the residual net birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual net of births and deaths over the past five years.
- The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations.
- Note that the net birth/death figures are not seasonally adjusted, and are applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.
Coco, you also had a shot out.......be careful not to step in your own mess.
Good point URANUS! Never catch a falling ( KNIFE)!
You got that right!
ZeroHedge shout out on Bloomberg! it's about time!
on the down side.. doom and gloom are going main stream! Oops?!
Bloom Berg is pathetic. I want the Black Screen back!
Yen Cross
Yen Crossover, you are a black screen.
I don't recall an invitation? Nor do I want one.
Crossover, dont be mistaken, as this is no invitation. But if you want a shot at the title, then bring it and I will box your ears. I will leave your ears bloody and tarnished for life. That is what I do to fools like you. Thank you very much -- punk.
Any ideas for the Sunday open GOD? AKA URANUS.
None. Just stay heavy in metals and roll into FAZ when the banks rollover. Coming soon....
No geo- political thoughts? No Bond spreads?merger talks and q2 filings? No Fed and ECB talks? That is just the tip of the ice burg! ( PUN INTENDED)
Nice work on Roaming Yen, he's all show and no go...besides he's so brilliant he found it necissary to buy a farm in Argentina for the pending "heat" that's coming. Sounds like UFO's to me, many sightings, just still looking...
Hope he doesn't "box my ears", sounds like a scary dude!
Another "ear boxer"! This one seems new to the game.
ZeroHedge shout out on Bloomberg! it's about time!
Give this classic a listen
http://media.bloomberg.com/bb/avfile/Markets/Analyst_Calls/vrT.qGWIoYPk.mp3
Sorry if someone has posted this already. One of the best Jim Rickards interviews in a long time.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/6/4_Jim_Ri...
it blows my mind that the name of a fictional charector who led an anarchist uprising with a plot to literally demolish the worlds banking centers in a primitivist push to wipe out all debt records was used as a pseudonym by an anonymous blogger who is now being talked about in the MSM.
always liked palahniuks books.
Knowless, learn how to spell Chuck Palahniuk, then speak/type your jibberish.
it has taken so long for someone to call me on my gibberish here. long overdue imo. i'll fix it just for you.
And you called me a CHILD? Uranus?
YC, now I am starting to get it. But this is what I meant by some of the foolish comments that get posted.
Thank you! We will talk over the Pacific. P.S. I'm a young 45!
do you mean hazardous or stupid? I spell checked so you wouldn't be offended=-)
The BS from the BLS has been piling up for months now... its hard to sell the idea jobs are coming back to a public where 25 million are out of work and more people give up looking each month than find a job...
Patiently awaiting the riots and looting to start....
There is plenty of Jobs at least in IT sector, which I
following, nearly as many as in 1990's. Yes, in USA.
Some of you, lazy punks, must be departed to Mexico,
or something, to feel better about US in comparison.
No Jobs? Riots? Move your Ass off the couch ones
and look around..
Here's an idea for you Gandhi: Learn English and then shut the fuck up.
Learn VB.net, Java, PHP, XML and how behave properly,
don't drink too much and stop smoking,
then maybe you going to get job, which
is better, than flipping the burgers in nearest MCDonalds.
And I'll be your manager than, even with broken English.
So your advice is that I should not drink and labor at grunt level programming until I can score a job as a McDonald's manager?
Now I feel guilty. Good luck to you Gurdeep...
Greeny, I cant even understand what you are trying to say. Learn how to type/write/spell and then say something meaningful. Until then, please shut up and sit down. Thank you and have a nice night..........
I said there is plenty of Jobs in Information Technology
sector in the USA. Help wanted.. NJ,PA,NY.. People who
cleaning houses around here making 700$ a week ( cash.)
No jobs in USA? Enough jobs, if you want to work, otherwise
you can also shut up. Thank you too.. Anyone who are not
happy move some place else, to Argentina or Russia,
then you will know what that means no Jobs.
Greeny, I am very happy here in the good ol USA. Though I recently bought a ranch in Argentina, so when the riots start I can take my family and get the hell out until the shit is over. Then I will come back and make a few bucks..............again!!! If you work on your English, maybe I will hire you on the next go around. I definitely need someone to clean-up the stables. Thank you, come again..........
All hat and no cattle, I suspect.
Argentina is your safe haven??? Ok, well, good luck and all.
you go Greeeny...tell it like it is!
tell them how much cost a gallon of gas in UK to those complaining about high gas prices...
They
Do
Not
Understand.
They seem unable to.
There will be no undoing this because the fuel supply for the engine is being choked off. They have spent 100 years in a world of "infinite" oil and they have no models and no training and certainly no PhD dissertations about what happens to a world of 7 billion people, fed with food that can only be planted and harvested with oil powered tractors, as that oil becomes . . . and let's get the phrasing here . . . not scarce . . . locally zero.
Yes, let's face the words for what they are. There is entirely too much word game playing with "cheap oil" and "scarce oil" and "it's not running out". It doesn't have to run out to kill you. "Scarce" is an absurd word to use for this issue. OIL IS ABSENT IN PLACES THAT NEED IT. Demand is higher than consumption.
There is no fix for this.
On a Saturday night this isn't bad humor.
Why can't they just say it: "The birth death adjustment is simply feel-good total fiction."
B/D is unadulterated statistical garbage. Numbers pulled out of thin air, and has never been subject to critical peer review.
On that note, so is the entire BLS unemployment number... is unadulterated statistical garbage.
+1
Government unemployed statistics are as about as accurate as government inflation statistics.
Which is to say an absolute fabrication based on facts and real life factors.
"We must not look to government to solve our problems, government is the problem"
The Hopium must flow.
I predict 9.3% unemployment for the June number, and the pig Market up big Monday.
Let's forward ourselves to beginning of July.
Q2 GDP first look says south of 1%. Maybe just barely positive. U3 reads 9.3%, your number.
Now let's toss in WTI = $115, generating 0.6% headline CPI (7% annual). How in hell does Ben do QE3 with inflation like that? But he has to do someting with U3 clearly headed back up.
And how does Congress do fiscal contraction with GDP south of 1%?
Pig market will be up ONLY when the whispers of QE3 start. However, for this scam to work, the Fed has to be coy, and almost virginal, and will have to be dragged into it. Watch, this is how it will play out. "Oh, OK - FINE - if you really want it, we'll give you more QE. There, there. . . . "
Hopium Yes! +1
Ethan Harris = fucking propagandist.
Bullshit artist. Liar. Hopefully he gets a cell next to Ben.
I think the lamp post next door will do.
God I hate these fucking mouth pieces. The truth may set you free in the biblical sense but in the corpocracy speaking truth gets you fired.
"In times of universal deceit telling the truth becomes a revolutionary act"
We can't heal.... Analcyst talk for "We are fooked" - just speaky English please. ;)
yes thank you, well mmmmm yeah, blah blah blah, mmmmm the soft patch...
what a douche bag.
http://www.youtube.com/watch?v=2V1QB89CCz4
mmmmm yeah, blah blah blah mmmmm the soft patch...
what a douche bag.
http://www.youtube.com/watch?v=2V1QB89CCz4
Jersey Joe Walcott, blah, blah, blah. Just shut your pie hole, listen and learn. You probably work for Pepsi in some shit hole graphics job...........
Congrat's Tyler, Bloomberg TV pays attention )
Couldn't stand listening to their usual spin, same old same old BS - all hail more QE and fiscal masturbation, FED is independent, yada, yada.
In the end it got interesting though, Investment in America graph which pretty much says all. Contrary to what some claim (WH) no one is investing in innovation and related capital. Why bother if you can use cheap labor overseas? Well one out to if he considers a long term perspective, unfortunately no one does. However as long as it continues, we will be facing the new 'normal.'
Why do we even listen to the BAC and other bank analysts who have no credilbility. Amazing that these guys have no shame and come on shows and provide crap just to make a name.
Some one has to be an apologist for the TPTB - there is a long line of applicants for the positions.
Classic.
Whenever the "knowledgeable" corporate, or government official begins to talk about how many years, or how many man hours, how technical the systems in place or such nonsense you know there is no other discussion point available that won't make the speaker out to be totally foolish, ignorant, disingenuous, or a combination. The only step lower is the "with greater effort & resolve the situation may yet be successfully resolved" crap. The current top examples of that are the Japanese nuclear/tsunami disaster and the GFC.
How many times did this tool say recovery in 11 minutes? I counted 4 and stopped the video.
There is no "recovery", just a slow descent into a worsening economy.
Someone needs to report (in headline form) the real numbers w/o these phony statisical adjustments. The phony adjustment should be buried deep in the article. So 148,000 Jobs were lost last month. That should be the headline. How many people would still believe there is a recovery when jobs are being lost each month?
"gonna bring this show to a grinding, nerd halt." - wish more people would do that
Here's some news you can use: US economy - aside from DC and Wall St. - is now in freefall. 10 hours cab time today, in a "wealthy" west coast town...one (1) fare. As recently as 4 years ago, 20+/day. An economy is, in essence, transactions. Transactions declining rapidly.
Props for the shoutout on Bloomberg!
I'm in the process of starting a new small business. One of the first steps is to get an Employer Idendification Number (EIN) from the IRS. This seems like a much better source of real data / real activity than the BDA.
But people can create a business without ever employing anyone or making a penny.
True, but at least its somewhat hard data and not a bureaucrat's guess.
Ethan Harris didn't explain the b/d model, he endorsed the BLS use of said model. By endorsing the model, he didn't have to explain it, or defend it.
I mean come on, why would a sell side strategist, do anything as subversive as question whether or not this model may be used as a tool of manipulation (either implicitly or explicitly).
Congratulations Mr. Durden. It would seem that Tom Keene is quite a fan. Smart man the Mr. Keene.
Are you suggesting that Bank of "America" MERRILL LYNCH (remember them) would not want the American public to know that things are bad?
Everyone knows bankers are the most forthright, honest, downright decent and morally adjusted individuals on the planet...just ahead of politicians.
The real way to get to the bottom of this would be to know statistically what correlation there is between company creation during growth vs. recession. It's illogical to think that in an economy that has 44 million on food stamps, a severe constriction of bank lending, and a near zero savings rate that suddenly companies are going to form out of the ether. If anything recessions (or mythical recoveries) would amplify small company failures and reduce new company formation... But then I'm using logic, not a gov'ment strong suit.
MODEST QE programs? Sheesh, another Krugman.
Doofus alert.
Oh, and "investment in America"? Anyone who decides to "invest" in the newly developing hyper-nazi germany is an absolute, complete, utter moron. No wonder nobody wants to create a business here.
It's amazing to me that so many commented on this laughable clip but only honestann mentioned Ethan Harris' characterization of the Fed stimulus (that we know about so far) as "modest." What a tool EH is, what a blithering appologist for the disinformation machine.
What are the economist's rationale for adjusting the raw data? With the amount of analysis that occurs with every release it seems we could just analyze the fluctuations in the raw data. Now we have to analyze not only the raw data but also the adjustments.
http://www.digtriad.com/news/watercooler/article/178031/176/Florida-Home...
http://www.digtriad.com/news/watercooler/article/178031/176/Florida-Home...
most new business ventures are sent to planned parenthood..to be aborted per gov regulation and taxation. the real birth death adjustment: kill em all off..
hows this for job creation..if you own a business that provides 2 or more jobs with a payroll equal to one owner's income: each owner then has no income tax.
but the employees pay all the taxes..yep kinda makes one want to start a business..
"healing the wounds in the economy"?
The economy is bleeding out.
"I don't think we should assume they're wrong." Where's the data that they're right?
Zero Hedge got a mention on the MSM.
Good job.
"Has QE 1, QE 1.5, QE 2, have they been inadequate ?"
"Pulling out (monetary) nuclear weapons" ?
"Misallocation of resources since 2001" ?
That would be all the military spending since 2001.
Trying to bring some class to MSM no doubt, Kudos! Tyler!
To quote a showman: truth...
"They know nothing, the FED, the bank economists,
the ANAL ysts under Sarbanes, the Dodd Frank
Pols, THEY KNOW NOTHING, all they
know how to do is lie.........throw them all out.
its called JAPANATION, the beaurocrats, the govvies, who ruined,
the mortgage and banking, the printers, the spread the wealthers,
the crooks and incompetents, all lie to the people
and say; we meant well, we had good intentions,
just like the nukes in Japan, speaking with a
radiactive heart, we did not intend to be incompetent,
we re from the Guvmint, we re hear to tax and spend and help you succker.
hOws that spead the wealth hopy changy working for ya sucker?
The bankers economist must take a special course in propaganda "keywords" to insert in all non-sensical interviews. I am mad at myself for listening to this crap..All together now let's do a review of our keywords for the sheeple:
recovery
improving numbers
misallocation
more capital needed
normal levels of investment
BLS numbers are finely tuned and accurate
When policy is geared for the crony capitalists, how do they expect small/new business to pick up? Also, wouldn't the job numbers improve based on 200k+ additions or do they die so fast that the number becomes a non-issue at which point reinforcing the irrelevancy of the data?