Economists predicted 20 percent unemployment in May. How did they get it so wrong?

[Maeve]

https://www.washingtonpost.com/business/2020/06/05/unemployment-rate-wrong/

What the heck happened? In short, give some credit to the government relief efforts, especially “PPP," the Paycheck Protection Program for bringing back jobs. The program gave relief to small businesses (and a few larger ones, triggering public outcry) through loans that wouldn’t have to be paid back if most of the money went to rehire and pay employees. PPP money had to be used right away, and a lot of it started hitting small businesses bank accounts in late April and early May, which ended up triggering a net gain of 2.5 million jobs in May, the Labor Department reported. Many economists expected PPP would be a big factor in June, but it turns out the impact was also sizable in May.

A closer look at where those jobs gains occurred is telling. Over half (1.4 million) were in restaurants. Nearly 20 percent of the job gains came from construction. About 15 percent of the growth came from retail stores and about 10 percent came from dental offices. Restaurants and retail were heavy beneficiaries of PPP. On top of that, construction was deemed essential in many states for both homes and commercial properties, and projects ramped up as the weather improved.

The U.S. economic slide is likely bottoming out, but a recovery could take years

While Wall Street is cheering the jobs news, it’s important to remember that the unemployment rate in May is still a good bit higher than the worst days of the Great Recession. In short, it’s encouraging that 2.5 million got their jobs back in May, but 21 million are still unemployed.

Most economists look at these numbers and urge Congress and the White House to keep PPP and other aid going. Most of the government relief money is currently slated to dry up by the end of July. But President Trump and many of his top advisers question whether more aid is needed since the economy is showing several signs of improvement.

Much more at the link, but this was the best 4 paragraphs I could grab

[Jarqui]

1. As Trump et al were willing to mess with the Covid-19 numbers

Why couldn't they mess with these numbers?

I do not trust them

[uponit7771]

3. +1, Thank you, Trump KKKlan are predators we don't trust them

[uponit7771]

2. NO !!! BLS ... ***ADMITS*** to cooking the books here (link)

https://www.democraticunderground.com/100213547268

[Maeve]

4. The article does bring some of that in

Another quirk is people who told the agency that they were temporarily laid off because of the pandemic. The BLS classified many of these people “employed but absent from work due to other reasons.” Normally, this is a very small category, but several million people were classified this way. The BLS even put a special note to say the unemployment rate would be 16.3 percent, not 13.3 percent, if all these people classified as absent from work due to “other reasons” had been classified unemployed.

https://www.washingtonpost.com/wp-apps/imrs.php?src=&w=916

[honest.abe]

6. They should have done this the opposite way.

Report the actual correct number "16.3%" and in the footnote indicate that 3% were classified as temporary due COVID and will likely be returning to work. The data as presented is terribly misleading and I am sure done for political purposes.

[uponit7771]

8. +1, so true !!! I am very disappointed in the BLS for 3 straight months of "Mistakes" in reporting

... then shades the report towards the positive number !?

WTF...

Too many Trumpers in the government who need to go to jail

[Wounded Bear]

12. Three kinds of lies: lies, damn lies, and statistics...nt

[Igel]

14. It was done, they explained, for consistency.

They used the same methodology as in previous years. If you change the methods used, you make the numbers not even possibly comparable. This is a bad thing.

But since they think the numbers are skewed--"think" is the operative word--they adjusted them.

People are choosing the high or low number based on what they want to see more than reality, and decrying (or lauding) the very explicit fudging as implicit or explicit, good or bad.

I'm affectless in this regard: Instead of evaluating, I merely go with Ǝ.

[DrToast]

20. +1

[honest.abe]

22. When in previous years have we had anything like COVID19??

Im confused.

[DrToast]

19. That would require deviating from normal procedure

They are being consistent in how they handle this group of people.

[honest.abe]

21. So the normal procedure is to not to report the actual numbers??

Who decides when its appropriate to deviate like this?

[Horse with no Name]

18. do they always count 16 year olds?

just curious?

[qazplm135]

5. I suspect this is what follows

Trump et al will refuse to do any more aid, and that will slow the pace of growth and possibly make it fall back by the end of summer.

But in the short term, yeah, the economy is going to improve, he's going to crow, and some people will come back to him and the race will tighten. But folks need to be steady. He will also do more stuff to make it worse, and ultimately I think the lack of sustained aid will restrict the return of jobs to a level that will still be higher than at any time since the Great Recession.

[uponit7771]

10. +1, but most likely the Kremlin KKKlan thinks it wont be till after the election and yes the economy

... will go from -50 to -25 but for some reason they'll think its a cause to spike the DOW another 2000 points

[bigtree]

7. black unemployment went up a percent

[Wellstone ruled]

9. My guess is,

the States that only have twelve week UI have reclassified those persons as returned to work status. As well as all those Claims Pending as Hired Status. Here in Nevada,our UI system Technology collapsed and many who should qualify are still stuck in no mans land. States like Florida and Texas,stories popping up about 30% of those who qualify are never going to see a penny.

Something smells like a serious Book Cooking job going on,it is a nasty thing with Statistics,all about the Inputs.

[unblock]

11. mostly, they didn't get it all that wrong.

bls admits to a 3% error, so the headline really should be 16.3%.
predictions had been as high as 20%.

given how huge the numbers are and how bad the survey response was (15 percentage points lower than usual), this isn't off by much.


and this assumes there aren't other errors, which there pretty clearly were.

[ProfessorGAC]

15. +1 (nt)

[Johnny2X2X]

13. Massive mistake, that they now admit.

Link to tweet

?s=20

[W_HAMILTON]

17. They go back and revise their figures all the time.

If they caught an error, they should revise their previous numbers and then everything is all back in-line.

It sounds like this Twitter feed already did the math for them -- why couldn't they do this themselves?

[roamer65]

16. They didn't get it wrong.

The U6 unemployment rate in May was 22 percent.

https://www.bls.gov/news.release/empsit.t15.htm