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Autor: rita 03 March 2011
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Employment and Unemployment on the macroeconomic level directly correlate to the health of our economy. Total Employment can be broken down and measured by several different sets of data: Total Nonfarm Employment, Civilian Unemployment Rate, New Jobless Claims and Help-Wanted Online Advertising. Statistical analysis of both current and historical trends within this data can be used as an indicator to predict future states of the economy.
It is important to understand where and how total employment statistics are gathered in order to properly analyze the data. The Bureau of Labor Statistics (BLS) collects data on employment, hours and earnings from approximately 390,000 business establishments (Clayton 77). The data is collected from surveys conducted during the reference week, which is the calendar week (Saturday through Sunday) containing the 12th day of the month. This data is then used to comprise the Current Employment Statistics (CES) survey that covers the nonfarm payroll estimates for total employment, average weekly hours worked and the average earnings. Total nonfarm employment is classified as being employed if, during the reference week, he or she did any work at all as a paid employee, worked in their own business or profession for pay or worked without pay at least 15 hours in the family business (Clayton 78). When the Total Nonfarm Employment data is graphed in relation to millions of workers, the trend line can indicate how the workforce and economy is doing on the whole. The Total Nonfarm Employment can be considered a coincident indicator of a recession when it begins to fall. Conversely, the recovery of Total Nonfarm Data is a lagging indicator for the end of a recession.
In the monthly Employment Situation Summary, the BLS reports the most current employment situation consisting of the number of new jobs created or lost within the civilian labor force and is the source of the monthly unemployment rate. To be counted as unemployed, you have to be considered part of the civilian labor force and without a job during the survey week. The civilian labor force (CLF) is defined as "all civilians 16 years or older who are not confined to an institution and are not on active duty in the armed forces" (Clayton 86). These persons would have to be both available and looking for work and would have to have made at least one specific effort to find a job during the month preceding the survey week. The CLF also excludes those confined to a mental hospital or prison. The unemployment rate is equal to the number of unemployed persons divided by the total civilian labor force (Clayton 86). The unemployment data is collected monthly by the census bureau for the BLS and the survey is called Current Population Survey (CPS). CPS is the source of most labor market data, including earnings differentials among worker groups, labor force participation rates and demographic characteristics of workers (Clayton 84). The unemployment rate has considerable value as a leading indicator of the future economic downturns and a lagging indicator of impending recoveries.
The Employment and Training Administration (ETA) in the U.S. Department of Labor tracks the "initial unemployment insurance weekly claims", better known as the "New Jobless Claims" or "Initial Unemployment Claims". The jobless claims are a leading indicator when it comes to forecasting peaks in economic activity and a coincident indicator when it comes to recoveries. This is also one of the leading components for the Leading Economic Index. There are two other surveys used as economic indicators: "Help-Wanted Advertising" (HWA) and the "Help-Wanted Online Data Series", (HWOL). The HWA tracks the help wanted classified ads printed in 51 cities around the country and the HWOL tracked help wanted ads that appeared online. The HWA was a reliable leading indicator when predicting the expansion and tended to peak several months before the recession set in. It is uncertain how reliable the HWOL data is as economic indicator mostly because it has only been tracking since 2005. However the preliminary figures appear to be a leading indicator for the 2008-09 recession.
In conclusion, it is the opinion of Group 5 that the assessment of these four sets of statistical economic data could be skewed in any direction depending on the level of bias associated with the source of data collected. It is our opinion that, given the partiality of the data specified for each survey, you must account for a percentage of error in the accuracy of each set of data when it is used as an economic indicator of what is yet to come.
Clayton, Gary E., Martin Gerhard Giesbrecht, and Feng Guo. A Guide to Everyday Economic Statistics.
New York: McGraw-Hill/Irwin, 2010.