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View Diary: Unemployment Rate and Jobs Added Numbers Come from DIFFERENT SURVEYS (33 comments)

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  •  I am not sure how much business confidence (1+ / 0-)
    Recommended by:
    gramofsam1

    turns on official reports of unemployment -- whether U-3, U-6 or any other measure.

    Business confidence likely comes from their perception of market demands relative to supply costs.  If a business sees skyrocketing demand and relatively stable costs, then they will report higher confidence -- even if unemployment is high.  If a business sees low demand and increasing costs, they will report lower confidence -- even if official unemployment is low.  Official unemployment reports lag real changes in the economic fundamentals.

    You wanna f*%^ with Big Bird? You gotta come through me.

    by DaveV on Fri Oct 05, 2012 at 07:47:38 AM PDT

    [ Parent ]

    •  BLS (0+ / 0-)

      Has been counting employment this way for a while.

      So it's not a recent change.

      http://en.wikipedia.org/...

      The BLS revised the CPS in 1994 and among the changes the measure representing the official unemployment rate was renamed U3 instead of U5.
      Bush however kicked around the idea of reclassifying fast food burger assembly as manufacturing to hide the fact that so much manufacturing had gone overseas.

      http://money.cnn.com/...

      Both biz/consumer confidence are effected by unemployment numbers.

      If you have a few months of unemployment dropping then this is very positive news.

      So biz/consumers are more apt to start spending.

      "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

      by bcdelta on Fri Oct 05, 2012 at 08:08:51 AM PDT

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    •  Here's an example (0+ / 0-)

      Retail does almost 50% of sales in Q4 - at least for tech.

      So how much inventory does Macy's order or Amazon for that matter.

      They base it on current sales + they have to anticipate consumer demand.

      If unemployment keeps dropping then they will order more inventory.

      Too little inventory and they miss sales.  Too much and they lose money because to move it they have to drop prices and buying inventory and owning it costs money.

      Behind retailers the manufacturer's also have to guess sales so they have sufficient raw materials to build the required inventory.

      So businesses certainly look at non-farm payroll and other economic data.  

      "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

      by bcdelta on Fri Oct 05, 2012 at 08:30:59 AM PDT

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      •  Maybe retail sales. (0+ / 0-)

        That's a good observation.  But I don't see the case for other sectors.

        You wanna f*%^ with Big Bird? You gotta come through me.

        by DaveV on Fri Oct 05, 2012 at 08:38:06 AM PDT

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        •  It doesn't (0+ / 0-)

          apply to everything but it does to a lot.

          Aircraft would be based on actual orders.

           

          "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

          by bcdelta on Fri Oct 05, 2012 at 10:15:48 AM PDT

          [ Parent ]

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