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One of the most controversial comments that has ever showed up in Art Cashin’s Cashin’s Comments was a note from the King Report that said 1.8 million jobs were lost in the U.S. last year on a non-seasonally adjusted (NSA) basis.Lance Roberts did a beautiful job explaining exactly what’s behind this discrepancy in the jobs data. Ultimately, the NSA numbers will have to (and is expected to) catch up to the seasonally adjusted numbers within the next few months so that the number tie out.
Anyway, Cashin has gotten a lot of crap for presenting the NSA number with little detail. But he still believes it is something worth noting because we won’t know for months if those numbers will tie out.
From today’s Cashin’s Comments:
My comments about the non-seasonally adjusted (USA) 1.8 drop in payrolls in 2012 brought in lots of reaction from some friends and, in particular, some from my most recent dinner. Basically, they all wondered if I had lost track of the importance of seasonal adjustments.
They reminded that during the yearend holidays millions of people are hired as everything from sales clerks to Santas. And, when the tinsel comes off the tree, are they not laid off? Some reminded that over the last 10 or 20 years, the first two months of every year have seen similar, or even larger, drops in NSA payrolls. Duh! Yes, I know.
My point – poorly made, I guess, was twofold. First, that as Lakshman Achuthan asserted, the severity of the great recession may have produced such severe numbers that they may have distorted the adjustments in the last few years.
Secondly, I wanted to suggest that we may have a bit of an economic La Cage Aux Folles – what we think we see is not what we are actually looking at.
As the first quarter has progressed, the headline data has offered hope. Payrolls were said to rise over 200,000 in both January and February. Each week Initial Claims have steadily improved. But all of the cheer is in the adjustments. Those 1.8 million laid off Santas probably filed for unemployment but were adjusted away.
Seasonality is important, logical and necessary for perspective. But, sometimes the real world can look a little different. We won’t know if the image was distorted until months from now. It may be too early in the season for rose coloured glasses. They’re more a summer thing – right?
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