Wampum

How will the media spin Friday?

And I don't mean during the evening's Presidential debate.

On Friday morning, the Bureau of Labor Statitics releases the September Employment Situation, or the "jobs report". According to the market analysis at Briefing.com, a mediocre increase of a 150K jobs is expected. Well, that was what they expected before a report by noted HR consultants Challenger, Gray & Christmas indicated that the number of planned layoffs increased a whopping 45% in September. Now analysts don't know what to expect, but most aren't feeling wildy optimistic.

Which is why I was a bit surprised to read this para in yesterday's The Note:

"The Wall Street Journal 's Greg Ip reports that the White House expects Friday's jobs report, the last before the election, will include not only good September numbers but a significant upward revision of older payroll numbers, helping "reduce Mr. Bush's first-term jobs deficit and weaken challenger Sen. John Kerry's attacks on his economic policies."

Unfortunately, I let my WSJ subscription run out last month, so wasn't able to access the entire article. But the implication Mr. Ip was being fed some pretty positive tips from anonymous sources in the Administration had me thinking about a report released late last week which got little scrutiny from both the press and the public.

That report was on "Personal Income and Outlays" (income and spending), which indicated a healthy 0.4% increase in personal income, although spending remained flat. Most media outlets unquestioningly reported the income numbers as a positive for the Administration, buttressing the claims that the "recovery" is alive and well. However, it seems that the reporting journalists failed to read the small print in the BEA press release:

The August estimate of personal income reflects the effects of Hurricane Charley, which hit the southeastern part of the United States in the middle of the month. BEA made largely offsetting adjustments to several components of personal income. Rental income of persons and proprietors' income were reduced by about $11 billion (annual rate) to reflect uninsuredlosses of residential and business property. "Other current transfer receipts from business(net)" was boosted by about $12« billion (annual rate) to reflect net insurance settlements (actual losses less expected losses) paid to persons.Because other effects of the hurricane were embedded in BEA's source data and could not be separately identified, BEA did not attempt to quantify their impact.

Although time and again over the past two years we've seen "adjustments" made in statistics and reports, I'm not claiming that the "estimates" made in the Personal Income reports were inappropriate. My concern is that multi-billion dollar revisions were made in an important economic report, and yet those adjustments went unreported by the media.

Why is this particularly important in regards to the employment report? Over a year and a half ago, I first reported that the Bureau of Labor Statistics had instituted extensive changes in how it was seasonally adjusting employment data. In the past, the seasonal adjustment were established for the year in advance. The Bush Administration revised that policy, allowing for seasonal adjustments to be "adjusted" throughout the year, reflecting meteorological or other unforessen events. This means that, under the guise of adjusting for the impact of September's hurricanes on the US Southeast and Mid-Atlantic, Friday's report has the potential for significant manipulation, which may or may not be investigated with any depth or accuracy by our generally lazy media.

Posted by MB Williams at October 6, 2004 09:40 AM | TrackBack