Art Cashin On Unadjusted Payroll Seasonal Adjustments

Tyler Durden's picture

We (and Charles Biderman) have previously discussed the seasonal adjustments to NFP data, which while potentially credible in a releveraging context, is far less meaningful when used on apples to apples basis for months in which there is material wholesale deleveraging and record warm weather. Yet the rub lies precisely in the seasonal adjustment, which for January and February has "added" nearly 4 million jobs based on nothing but historical regression patterns, and the "beats" represented less than 5% of the total addition, implying even a modest miscalculcation would have had a huge impact on market, and political, interpretation of the data (as explained here). Today, it is the turn of Art Cashin, quoting Lakshman Achuthan, to provide his take on "unadjusted seasonal adjustments."

From UBS Financial Services:

Seasonal Adjustment Is Unadjusted? - Lakshman Achuthan, co-founder of ECRI was interviewed yet again by Bloomberg’s Tom Keene. Achuthan is almost in campaign mode as he pounds the table reiterating the ECRI posture that we’re headed back into a recession.


His tone seems to indicate his frustration with what he sees as clearly misleading data. Here’s a bit from the new interview:

Most economic data is seasonally adjusted. This is a good thing because there are seasonal patterns during the course of the year. But the sheer size of the recession we went through had an unintended impact on the way those algorithms run. When the economy fell off a cliff in the Great Recession it was like no other recession we have experienced, so it wasn’t easily compared. The systems received data in Q4 and Q1 expecting it to be particularly weak on a seasonal basis. Therefore, they adjusted upwards and that was not intended. There is an easy, un-confusing, fifth-graders-can-do-it, way around this, which is to look at the year-over-year growth rate which shows something quite ominous. When we look at our forward-looking indicators both sets surged initially coming out of the recession. Then they rolled over. They popped up briefly again about a year ago and now they have turned down again. The Weekly Leading Indicator is now at its worst readings since July 2009. These leading indicators have hardly been swayed from their recessionary trajectory. So it brings the bigger question, can unprecedented global monetary policy repeal the business cycle? And these pictures say no.

That re-sparked curiosity about last week’s citation of the King Report’s assertion that without seasonal adjustment, payrolls have actually fallen 1.8 million jobs. We’re still trying to run down that stunner.

Just don't tell Ben about the bolded, underlined bit above. It would make him sad that he can't single handedly control the worlds of finance, economics, and statistical mean reversion.

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GeneMarchbanks's picture

'It would make him sad that he can't single handedly control the worlds of finance, economics, and statistical mean reversion.'

Lucky for Ben that these aren't covered by CNBC etc.

Quinvarius's picture

The coverage will just change to the "awesomeness" of the "jobless recovery" which as we all know has been the standard type of recovery since 1971.

kralizec's picture

Reality is not an option.

SheepDog-One's picture

$5 gas average IS reality.

kralizec's picture

That's a man-made disaster.  Obamanomics 101.

crawldaddy's picture

this disaster started way before obama.

knightowl77's picture

Yes, but he doubled down and decided to accelerate us into that ditch he keeps carping about.....

Toolshed's picture

Worse still, didn't he go on and on about "change we can believe in"? Maybe he was refering to the pocket change that will be all we will be left with before he is done.

AmCockerSpaniel's picture

Never forget that Big Ben is where he is only because Obama allows it. The buck stops with the president! If you don't like it, vote for Ron Paul. The people are not voting for him, so do the math.

jpmrwb's picture

Exactly correct. We have the Bush/Obama economy and we did have the Hoover/FDR economy. They look very similiar.

TruthInSunshine's picture

crawldaddy - the disaster actually started, in terms of fundamentals, with the recognition and empowering of our 3rd fractional reserve bank in 1913 (Federal Reserve Act of 1913; it was actually a fait acompli in 1910, but that's neither here nor there), and the magnitude of the cancer and its spread was only hidden from sight by WWII and the great aftermath, whereby the U.S. was the factory of the world AND had assumed the world reserve currency mantle, given the bombed out infrastructure of former European centers of commerce, shipping, rail and manufacturing (whereas ours was unscathed).

The disaster was hastened by Bretton Woods, the Plaza Accord, closing of the gold standard in 1971*, etc.

Now that the globe is run by a very select list of insiders who control global monetary policy via coordinated fractional reserve central banks, and now that representative form of government via direct or indirect democracy is de facto dead (Deep Capture controls the system; 'voters' are inconsequential), American insiders have far more allegiance and commonality with Chinese or Indian or German Insiders, than any of these insiders do with anyone who shares their own citizenry. The notion that the insiders and appointed leaders have any allegiance to their own nation-state is truly and absolutely naive.


On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, “[t]he Bretton Woods system officially ended and the dollar became fully fiat currency, backed by nothing but the promise of the federal government.” This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states. At the same time, many fixed currencies also became free floating.

Madrid2020's picture

You can avoid reality,but you cannot avoid the consequences of avoiding reality-Ayn Rand

ElvisDog's picture

I have never understood why journalists/so-called experts accept seasonal adjustments when reporting employment data. The stated reason (I guess) for SA is so they can compare data month-to-month, but a more honest and straightforward way to present the data is to compare the current month to the same month last year. If they did that, no seasonal adjustments would be necessary and we could compare, real, raw data. But, I know, I shouldn't be so silly and altruistic so early Monday morning.

YC2's picture

Hah and all you a holes downvoted me for suggesting the same thing Achuthan did.

ThisIsBob's picture

Scaring the shit out of price this morning, ain't it?

SheepDog-One's picture

Gas price aint scared. Bend over at the pump, insert nozzle.

Cdad's picture


Seriously, could someone confirm CBOE VIX futures for me this morning.  After going out at 16.12 on Fiday, they are currently trading at 21.18 and supposedly down 1.8 percent [thus pressuring VIX trading instruments].  Something is truly broken here...just trying to figure out what.


DeadFred's picture

I don't know the mechanics of futures well but I'm guessing they are now referencing a different month. Longer dated VIX has been much more cautious than the "nothing's going to happen in the next twenty nanoseconds" crowd.

azzhatter's picture

If Liesman and Cramer find this out about Bernanke, no more blowjobs for Bennie. Oh, never mind Cramer still would

crawldaddy's picture

they dont care, they are about pushing the lie that everything is god so they can sell ad time.


ALL MEDIA cares about is selling ad time, thats the ONLY reason they exist.  The commerical IS the product, all the rest is just filler.

Village Smithy's picture

That's why this blog model is so effective and democratic. ZH is beholding to no one, only the truth. As long as there are eyes reading it the servers will assign adds to it. Works for me.  

firstdivision's picture

No worries, look at the 10Y, its signaling the all clear...LOL!  I'm sure the rising rates will help the housing situation.

Shizzmoney's picture

Here is Lakshman Achuthan's response to Henry Blodgett's assertion that ECRI's should state "We Were Wrong" about the recession they predicted on 09/2011

Most data, both public and private, are seasonally adjusted. But the nature of the Great Recession seems to have had an unexpected impact on the statistical seasonal adjustment algorithms that are hard-wired to detect when the seasonal patterns evolve and change over the years. This is normally a good thing, but when the economy fell off a cliff in Q4/2008 and Q1/2009, it was partly interpreted by these procedures as a lasting change in seasonal patterns. So, according to these programs, data from Q4 and Q1 would be expected thereafter to be relatively weak, and therefore automatically adjusted upwards. Our due diligence on this subject indicates a widespread problem, resulting in many recent economic headlines being skewed to the upside.

apberusdisvet's picture

  The reality that most of us see cannot be so easily swept away by hopium statistics; the obfuscation is almost too transparent.  Coincidentally,  the  ramp towards  totalitarian control is quite alarming.  The recent EO that allows the President to confiscate all national resources is fast on the heels of NDAA.  WHY ARE THEY MOVING SO FAST?  Something wicked this way comes.

FreeNewEnergy's picture

Here's an easier way to see through the fraud of the BLS.

It's widely assumed that 10,000 baby boomers are retiring every day. Even if it's only 7500 - and we'll use that as our baseline - that amounts to 225,000 job vacancies a month.

Now, it would appear that if we're just barely creating 225,000 net new jobs, then we're just replacing the retirees, not actually creating new jobs. If less than that, we're going backwards.

OK, so the BLS will say that, yes, 225,000 retirees are, in real terms, job losses, but those have been replaced, plus whatever we determine to be the new jobs (or new hires), which, in reality, would mean we replaced all those retiring workers' jobs with new hires (at lower wages, no doubt) AND created whatever our number is in new jobs, so really, yes, a lot of people left the work force via retirement (that explains the declining labor participation rate), but those jobs and more have been created. Seasonally-adjusted, of course.

Seems simple enough. Back-of-the-envelope economics 101, though I get the distinct feeling they're not telling us everything.

VelvetHog's picture

Don't forget the 125,000-150,000 people that come in to the workforce each month due to population growth.

neutrinoman's picture

Retirement does NOT explain the declining LFPR. The labor force is ages 16-65. The 55-65 set is being pushed, largely unwillingly, out of the labor market, into early retirement. Retires above 65 aren't counted.

And then there are the 20-somethings and early-30-somethings being left behind as well. Much the labor force growth, relative to population, of the last 35+ years is being dismantled by high-efficiency corporate practices, technology, and deleveraging.

chinaguy's picture

Go to the BLS site and look up "nonseasonally adjusted" numbers for "employed"


Feb 2009 +/- 141,000,000

Feb 2012 +/- 141,000,000


sbenard's picture

We're back in bubble territory. It's about time for a reality check!

neutrinoman's picture

Rather than seasonally adjusting things, we should be doing what they do in Europe and use moving (smoothed) averages, as Achuthan says, for everything: inflation (or prices), jobs, income, etc.