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« Measuring Inflation? You try setting the rules! | Main | ETF Update: Any Place Left to Invest? »

June 12, 2008



As a Fisher Investments employee, I've noticed that similar to the focus on unemployment, many are preoccupied with the status of the nation's banks. A good read on the topic:

Bill aka NO DooDahs!

Actually it was a comparison, not "name calling" - I have no idea, nor do I care, about Barry's status re: alcoholic intake.

He looks at the data in order to support a pre-existing point of view that he already holds, and admits as much himself in the above comment - which is substantive, given that HE made it. He says he "can take the output from various models, and report them in a way that most accurately paints a picture of reality," as opposed to using model output to UNDERSTAND reality. The difference is that, to Barry, the picture of reality exists before the model output. If the picture of reality were to be influenced by the model output, his sentence would be constructed entirely differently.

Ergo, like a drunk using a lamppost for support and not illumination, he uses statistics for support more than he uses statistics for illumination. This is not different from the majority of people, however. It's a common failing.

Of course, the possibility exists that it was just very poor sentence structure usage on his part, and he didn't really mean what those words said, but I think Barry's got a law degree and has been writing for some time, so I'm pretty sure that's not the case, and that he wrote exactly what he meant.


T-Bird Guy

Bill, I would hope to see more substantive criticism than mere name calling.

Bill aka NO DooDahs!

The majority of people (including Barry, as we already knew before he made the above comment) use statistics the way a drunk uses a lamppost -- more for support than for illumination.


The employment stats don't even show the largest section of job losses caused by the housing bust. I am (was) a mortgage broker and as such was considered a private contractor and will never show up on stats. Neither will contractors, real estate agents, landscapers, etc. I know lots of people in this situation. For the first time that I can remember Home Depot is not hiring for the summer season in my area. Things are bad and it's just starting to get the attention of the MSM. We need an economy that does not rely on bubbles and Ponzi schemes.

Kevin Diaz

All the statistics say unemployment is up but when you look at the jobs posted online you have to think its 1999 all over again. 100K, 150K, and 250K jobs all over.

Its like how do I land one of these gigs?


Barry -- Your comment makes the distinction quite clear. I use data as the basis for determining reality. You use something else -- opinion? Your gut feeling? Then you criticize the data if it does not agree.

The alternative measures each represent something different. Which one you use depends upon whether you are more interested in sustained unemployment, or broad effects including part-time workers.

You should NOT pick one just to make things look better (or worse) to the general public.

But thanks for stopping by to make the distinction clear. I guess that means you will not be advocating that media report all three!



Another quote from the .pdf:

"Aside from the fact that the proper focus is on the official statistics, it is important to note that there is little "value added" analytically in tracking alternative measures over time. While it is true that each indicator provides a different point estimate of "unemployment," all seven measures have essentially moved in lockstep with the business cycle."

Barry Ritholtz

All models are imperfect, but are not useless. We can take the output from various models, and report them in a way that most accurately paints a picture of reality. My modest proposal is to report the output of BLS surveys in a way that provides the closest approximation to reality.

Does U1 help reach that goal? I guess it does -- if you believe that the U3 measure of employment is OVERSTATING unemployment (which I don't).

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