Gauging U.S. Economy-Comparing Two Articles
An example of a blog that was not done to it’s fullest ability. However, I did put in the time to read and look for certain words or ways he phrased sentences to look for clues of how the author thought and wrote.
Shutdown Will Hinder True Gauge of U.S. Economy
Like a driver with a broken speedometer, economists are being forced to come up with new ways to gauge the economy’s strength as the aftereffects of the government shutdown distort the usual metrics.
-The writer included a metaphor just like you suggested.
Unlike the delayed jobs data released on Tuesday, figures for unemployment and job creation in October and November, experts say, will be skewed as hundreds of thousands of government workers and contractors disappear from the work force and then reappear in next month’s survey.
–Immediately explains the situation in the first two sentences. It say government shutdown-explains that the numbers for unemployment will be skewed bc “hundreds of thousands of government workers and contractors disappear from the work force and then reappear in next month’s survey.”
And from the canyons of Wall Street to the corridors of the Federal Reserve, that lack of data will have real-world ramifications.
-How will it have real world ramifications?
One reason the Fed is likely to wait until early 2014 to begin easing back on stimulus efforts is that policy makers there simply will not know if the labor market is gaining or losing strength before then. Not until December will the monthly jobs survey be free of the shutdown static, and that report does not come out until early January.
–and it answered my question.
The September jobs report was disappointing, with the economy adding 148,000 new jobs instead of the expected 185,000, but stocks rose on anticipation that Fed stimulus efforts would continue well into 2014.
The Fed’s purchase of $85 billion in bonds a month has buoyed Wall Street this year, because the flood of stimulus money makes riskier assets more appealing while keeping interest rates low and reducing borrowing costs. The benchmark Standard & Poor’s 500-stock index is up more than 23 percent so far this year.
On Tuesday, the S.& P. 500 index rose 10.01 points, or 0.6 percent, to 1,754.67. The Dow Jones industrial average gained 75.46 points, or 0.5 percent, to 15,467.66. The Nasdaq composite index increased 9.52 points, or 0.2 percent, to 3,929.57. In the market for government bonds, the price of the benchmark 10-year Treasury note rose 25/32 to 99 29/32, and its yield fell to 2.51 percent from 2.60 percent late Monday.
-Now the writer has included a lot of numbers to prove his point and add credibility to the article.
With traditional yardsticks like the jobs report blurred for the next two months, Ethan Harris of Bank of America Merrill Lynch said he was planning to look more closely at theUniversity of Michigan’s monthly consumer confidence survey to assess the fallout from the shutdown and other trends.
-“With traditional yardsticks like the jobs report blurred for the next two months” This sentence gives me the impression that the jobs report is extremely important.
One clue on that front could come Friday when the university will revise its monthly reading for October. The preliminary estimate recorded in the first half of October revealed a decline to 75.2 from 77.5 in September. Economists are expecting a small downward revision in confidence reflecting polling in the second half of the month, so anything more significant will probably get economists buzzing.
Paul Edelstein, director of financial economics at IHS, said those confidence figures could occasionally produce what he calls a “head fake” in terms of whether they translate into lower spending, for example, so he is keeping an eye on data from nongovernment entities, like chain store sales.
–I am curious if this was originally a quote that has been shortened and paraphrased.
Mr. Harris expects economic growth in the fourth quarter of 2013 to run at a 2 percent pace, weighed down by the government shutdown, but to rise to 2.8 percent in the first quarter of 2014 as the fiscal drag from Washington fades.
Other veteran seers are basically waiting until the smoke clears.
“We’re all going to have to calm down and be very patient,” said Julia Coronado, chief economist for North America at BNP Paribas. “It’s going to take a few months to get a good read after all the trauma.”
-Quote from “chief economist for North America at BNP Paribas.”
Even during otherwise-normal survey periods, there are complaints about just how accurate a picture of the economy can be drawn from government figures. For example, out-of-work Americans who give up looking for jobs are no longer counted as unemployed, thus helping to lower the unemployment rate .
-Sounds like the entire process is super confusing.
Then there are the revisions that take place regularly, which sometimes are huge but come long after initial impressions have been formed.
For example, the number of jobs added in August was revised upward on Tuesday to 193,000 from 169,000 — a difference of 24,000 that now makes August look like an upside surprise in job creation, rather than the disappointment it was reported to be at the time.
In addition, critics on the left complain that the unemployment report understates the true extent of joblessness in the economy, while some on the right have suggested the Bureau of Labor Statistics is manipulating the numbers for political reasons.
The truth, experts say, is that the government’s data set is still the best tool that economists have, whatever the flaws. “Nothing can compare to what we get from the government,” said Augustine Faucher, senior economist at PNC Financial Services Group in Pittsburgh.
Still, Mr. Faucher said he would be looking more closely at measures like the privateInstitute for Supply Management’s monthly manufacturing numbers, and the economic survey by the Fed’s regional banks, which comes out eight times a year and is known as the beige book.
Alan Greenspan , the former Fed chairman, was famous for watching obscure statistics like rail car loadings, but Mr. Faucher said that as services take up a bigger share of the economy, that kind of number becomes less relevant. “I think qualitative assessments become more important, and I’ll be paying more attention to the commentary in the I.S.M. and the beige book,” he said.
Guy Berger, an economist at RBS Securities, said he would be focusing on data for the housing market, one of the few sectors of the economy to shine in recent years. “Even before the shutdown, we thought housing data would be important, and it’s something that the Fed is also looking at closely,” he said.
Like most economists, Mr. Berger will also be keeping an eye on the usual statistics, however skewed by the shutdown.
“We’re going to look at the same stuff we always do,” he said. “It’s just going to be more murky than usual.”
The October jobs report, due out in just two and a half weeks, will likely offer only a muddled picture of the U.S. labor market as the effects of the partial government shutdown ripple through the data.
After Tuesday’s release of the September employment report , a “clean” reading of the labor market may not come until December or January. That could generate more uncertainty about the economy’s progress.
“We’re going to take the data with a grain of salt,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York. “The data could be distorted.”
The partial shutdown, which ran from Oct. 1 to Oct. 16, will influence economic figures on several fronts.
First, government furloughs, temporary layoffs for contractors or vendors, and hiring delays caused by uncertainty from Washington may tilt the underlying numbers .
“Although the direct impact of furloughed government workers will be minimal, the spillover into the private sector is somewhat more worrisome,” Sophia Koropeckyj, managing director for Moody’s Analytics, said in a research note.
Second, data collection was thrown off.
The Commerce Department‘s Census Bureau, which collects information for the employment report’s household survey, wasn’t able to work during the shutdown. If the government had been open, it would have reached out to households during the week beginning Oct. 14, asking people about their employment status the prior week. Those answers determine the monthly unemployment rate, workforce participation rate and other numbers.
Instead, Census is in the field now, asking about the week of Oct. 6-12, a longer lag than usual that will force respondents to recall earlier dates.
Economists worry that the result could be fewer and less accurate responses.
“The next household survey will have questions about reliability and consistency,” Jay Feldman, director of U.S. economic research at Credit Suisse, said in a note to clients.
Bill Bostic, associate director for economic programs at Census, said the agency carefully weighed data collection, processing and release dates to come up with a revised schedule for its reports. The delays mean more work and additional follow-up for the array of information that Census collects, he said.
“If we really feel uncomfortable with the quality of the data, we would suppress that particular data cell for the month,” Mr. Bostic said. “I think for the most part we will be just fine.”
The Labor Department collects information for the payrolls part of the survey, which shows how many jobs employers added during the month. That survey period will now end on Nov. 4 .
A Bureau of Labor Statistics spokesman declined to comment on data-collection issues.
Up Next: October Jobs Report Likely Skewed by Shutdown
I choose this topic bc I don’t know much about it. I feel I can come in with an open mind and not be bias.