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A ‘misclassification error’ made the May unemployment rate look better than it is.

When the U.S. government’s official jobs report for May came out on Friday, it included a note at the bottom saying there had been a major “error” indicating that the unemployment rate likely should be higher than the widely reported 13.3 percent rate.

The special note said that if this “misclassification error” had not occurred, the “overall unemployment rate would have been about 3 percentage points higher than reported,” meaning the unemployment rate would be about 16.3 percent for May.

Economists said the big takeaway is that it’s hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.
https://washingtonpost.com/business/2020/06/05/may-2020-jobs-report-misclassification-error/

Comments

  • edited June 2020
    From the article (the gains, due to reopening still stand but that in addition to the May number being wrong the March and April unemployment rates were also underreported)

    “ This problem started in March when there was a big jump in people claiming they were temporarily “absent” from work for “other reasons.” The BLS noticed this and flagged it right away. In March, the BLS said the unemployment rate likely should have been 5.4 percent, instead of the official 4.4 percent rate. In April, the BLS said the real unemployment rate was likely about 19.7 percent, not 14.7 percent.
    Economists said the big takeaway is that it’s hard to collect real-time data during a pandemic and that while the unemployment rate remains high — likely more than 16 percent — it has declined a little from April.”.

    I want to see what this does to number of jobs which is currently reported at around 133,000,000.
  • edited June 2020
    Think 16% maybe better than 20% imho...lots folks probably have it staying home too long and want get back to normacy and working [eat wine dine shop normally]..next month maybe < 14% ..

    if more than >17%, stock futures may give back >1000 points ..monday will be very interesting

    Did (think??) BLS give wrong falae suppressed data under Barry Bushes Clintons dictatorships ?
  • @johnN

    What in the hell is this statement????????????????????????????

    Did (think??) BLS give wrong data under Barry Bushes Clintons dictatorships ?
  • Could it be POTUS that deflate data at market opennings and inflate late fri evening?

    Think I remember Ussr loving Mitch and Romney kept pounding Obama about false unemployment rates reported
  • @johnN

    You didn't answer the question..........dictorships??????????????????
  • edited June 2020
    Imho think many folks calling Bush presidential dictatorships because they went to middle east and create wars although many USA fellowships do not agree with their views
    Clinton's they were above the laws and did better after impeachment
    Obama for creating ObamaCare without partisanships
    Trump _ well no needs to describe, he does what he want without remorse feelings and he is surely against everyone
  • edited June 2020
    @JohnN You don't know the meaning of the word "dictatorship." If Clinton had been a dictator, Ken Starr would not be alive today. Obama created the Affordable Care Act after intense negotiations with the healthcare industry and Republicans who sought to block him at every turn but only after a humane Republican of the old more honorable school McCain switched sides. That legislation also survived the attacks of a conservative leaning Supreme Court. Bush may have been incompetent and seized more powers with the Patriot Act, but he wasn't a dictator either.
  • edited June 2020
    My apologies .
    Imho I think present and past POTUS opinions and voting records are so strong /skewed and seem >50% favored one sided; the other side definitely think 'dictatorships' but in reality they only vote/do what best for their party (except for Trump maybe)...

    Strong opinionated maybe corrected term...
  • AFTER President Lyndon Johnson signed the Civil Rights Act of 1964, he reportedly turned to his press secretary and lamented that Democrats “have lost the South for a generation.” Johnson's judgment was optimistic.
    The Economist, Nov 11, 2010. https://www.economist.com/united-states/2010/11/11/the-long-goodbye
  • About those unemployment numbers (quoting Heather Cox Richardson):

    " The report showed an unemployment rate of 13.3%, although it had been expected to come in about six points higher. Even with those gains, the US has one of the highest unemployment rates in the world, according to Josh Lipsky of the Atlantic Council. And there is a problem with the report’s numbers, noted on the report itself. Because there was a “misclassification error”—people furloughed because of the pandemic did not get counted as unemployed-- the numbers are about 3 percentage points low, putting the real unemployment rate at about 16.3%."
  • Just wait until the second derivative effects...many publically traded corporations are stack ranking their associates...end of quarter coming up... virtually guaranteed the unemployment stats are going to go the wrong way shortly.... those corps who are back to work are having real issues with folks taking ill from the virus.... the jobs that will be lost going forward are the one's that pay for a middle class lifestyle plus...gonna crimp spending and consumption

    I see many at risk folks walking around like no virus even existed hospitalizations going down but still very busy according to my pulmonary critical care physician brother in downtown Chicago

    I hope I'm wrong and end up regretting being in a very heavy cash position and the virus fizzles out

    Posting for entertainment purposes only

    Good luck to all

    Baseball fan

  • Why all the agitation over BLS misclassification errors this month, when similar ones last month were arguably worse? Something that @Rbrt pointed out.

    Actually, if both April and May numbers were adjusted as suggested (to 19.7% unemployment in April and 16.3% in May) the reduction in unemployment, such as it is, would be 3.4%, far better than the official 1.4% reduction.

    The flaw in the April figures was obvious; one didn't need the BLS or reporters to it. The number of people in the labor force (i.e. employed or unemployed) does not drop from 162.9M in March to 156.5M in April, unless a lot of the newly unemployed are being counted as no longer in the labor force.

    Here are the BLS figures; read from them what you will:
    https://www.bls.gov/news.release/empsit.a.htm

    Forbes, May 10, 2020,Don’t Be Fooled By Official Unemployment Rate Of 14.7%; The Real Figure Is Even Scarier
    “Interviewers were told to classify people who were employed [but] absent from work due to COVID-related reasons as temporarily unemployed. Many did this incorrectly —correcting for this error raises the unemployment rate to nearly 20%,” [Betsey Stevenson] explained. [Ms. Stevenson "was a member of the Council of Economic Advisers as well as the Chief Economist of the U.S. Department of Labor".]

    To its credit, the BLS realized and called out this technical misclassification in its report ... The misclassification caused the BLS to understate the unemployment rate by roughly five percentage points, meaning the adjusted unemployment rate is really closer to 20%.
    https://www.forbes.com/sites/shaharziv/2020/05/10/dont-be-fooled-by-official-unemployment-rate-of-147-the-real-figure-is-even-scarier/#3aa898c055dd
  • @msf Thanks for the added details. The size of the "errors" for April and May appear to be similar to the size of the total monthly unemployment rates for many preceding individual months (how the world has changed!). This article was the first I noticed to point them out. It seems odd the BLS did not more prominently make reference to them at the beginning of their monthly News Releases given their magnitudes. That likely would have provided a clearer picture of the current unemployment situation. (The note referenced in the Washington Post article is located near the bottom of page 6 of the BLM's June 5 News Release.)

    https://bls.gov/news.release/pdf/empsit.pdf
  • edited June 2020
    Well, the Liar in Chief's partisan influence, in a suffused, indirect way, might, it seems to me, have prompted some bureaucrat or manager to hide that "misclassification" in the footnotes, regardless of whether it utterly transmogrified the REAL numbers. Because, well... it's easier to obfuscate that to be direct--- especially given the Suck-hole-In-Chief's utter preoccupation with NUMBERS, rather than human people and their real lives.
    P.S.: I can't breathe.
  • see other thread and BCasselman's drilldowns
  • edited June 2020
    yup. Just saw that. We all know that the metrics for measuring unemployment has been massaged for a very long time (per @rono.) Yet the miraculous upswing in the latest numbers are risible. As much as we didn't trust previous unemployment reports, this one is simply, truly, utterly bogus.
  • from this it seems you did not read the thread deeply?
  • Crash said:

    yup. Just saw that. We all know that the metrics for measuring unemployment has been massaged for a very long time (per @rono.) Yet the miraculous upswing in the latest numbers are risible. As much as we didn't trust previous unemployment reports, this one is simply, truly, utterly bogus.

    Anything to do with Trump is "bogus"?
    The 6 months ago BLS great report was bogus. The last one was bogus.
    Trump declared that breathing air is good for you.
    4 more years are coming :-)
  • ...and just how does a "misclassification error" differ from a "classification error"?
  • Howdy folks,

    As Hank mentioned, there can be a lot of discussion about the semantics of this but the bottom line is everything these days coming out of Washington has to be suspect. This is not a knock on the Federal civil servants doing their best to do their job. And we know that they've been 'massaging' the numbers FOR GENERATIONS. That's the nature of the beast. At shadowstats.com, one of his alternative stats is for the CPI as calculated today vs. how it was determined during the Reagan admin. It would be 8% points higher today.

    However, when they starting beating drums and calling out the marching bands like earlier this past week on the ADP, they knew, and most of us knew, the unemployment numbers were going to be wonderful. And bullshit.

    At this point in time, there is NOTHING that comes out of the government in Washington that can be believed. Will it be couched in seeming truths? Of course. They'll gussy it up like the prettiest silk purse you'll ever see. And some people will believe it and some won't. And this administration doesn't even care if you don't believe them. The base does.

    Remain skeptical . . . and stay thirsty, my friends.

    rono
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