Thursday, October 11, 2012

Jobs Report Statistically Impossible

Seth Mason Charleston SC blog 38
Let's do a statistical analysis of that infamous September jobs report that Rick Santelli tore apart the other day in his epic on-air rant. The report showed initial unemployment claims of 339K. That's nearly 6--six--standard deviations away from the mean consensus estimate of 368K. For those unfamiliar with statistics, that's a lot. It's so much, in fact, that the probability of such a statistical anomaly occurring is well below 1%. (6 standard deviations is about as close as you can get to 0% without reaching it.)

Jobs Report Statistically Impossible - chart 1

If that didn't knock you over the head, there's more: The divergence between the reported ("headline") weekly numbers and the revised numbers keeps getting larger. As of the last report, the BLS has added 200K initial claims to its revisions. This would suggest that when the September jobs report is revised, several thousand initial claims will be added to the reported 339K.

Jobs Report Statistically Impossible - chart 2
But there's still more: The last time we saw such a large month-to-month drop in initial claims was February 2006, when layoffs were unusually low (because we were at top of the housing bubble) following typical seasonal layoffs in January.

Jobs Report Statistically Impossible - chart 3

Add all this together, and you get a September jobs report that's not a statistical improbability; it's a statistical impossibility.

Seth Mason, Charleston SC


  1. It's me, Anonymous (aka Anonymous One) again. The tragic part about all of this is that none of it even matters. So they cooked the books... so what? Or better yet, why? Because of the "8% rule." Again, why? Why BOTHER is the REAL question. People don't support him, they WORSHIP President Big Ears. It's just like the dictators over seas only he hasn't turned the military on his own people... yet. The numbers MIGHT affect a few undecided folks, but the remaining debates will make them irrelevant - accurate or not. All for now. Good article, Seth.

  2. Great article Seth, but I'm more interested in why they cooked the books. I think it may have something to do with hyperinflation heading our way if we keep buying mortgage backed securities. The report merely justified being able to stop buying debt.


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