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« ETF Update: How Currency Moves Affect Your Positions | Main | Four Things You Didn't Know about Unemployment »

September 28, 2009



gaius marius -- As you know, I have long respected you as an open-minded observer, albeit one often on the other side of my trade:)

That's fine. I am a fan of constructive engagement.

Let us just start with the idea that the model failed "at the turn." Just when did that happen? The turn was nearly two years ago. The big decline was q408, where I expected a "stress test" of the model.

Chris Manning is a sharp guy and a regular contact of ours. I met with a group at the BLS last summer, and he set up the meeting.

I'll try to summarize the situation in an article, but it is a bit more complicated than suggested by the Bloomberg piece.

I know you will be there for an open-minded consideration. There is a definite issue, and I am going to write a thoughtful, well-researched piece, as you would expect.

Thanks again,


gaius marius

i know the birth/death model has long been a bone of contention, prof -- i thought you'd be interested in today's bloomberg piece.

“In this period of steep job losses, the birth/death model didn’t work as well as it usually does,” Manning said in an interview. “To the extent that there was an overstatement in the birth/death model, that is likely to still be there.”

i can't speak for others, but my concern with the birth/death adjustment has been that it probably misstates job creation significantly in the turns. that seems to have proven true. kudos to the BLS for recognizing -- hopefully the model will be revised again.

Andrew McCauley

I really like this idea. Well done & thanks.


Prof, don't be "distressed" that bloggers, like investors and others, follow a herd mentality or show bias. Simply do as you would in a financial market: dispassionately take the other side of the trade.

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