Glenn Beck claimed on his Fox News show tonight that the government “changed the seasonal adjustment” formula to inflate the October job numbers:
BECK: Who can you trust? Can you trust the government and their numbers right now? Well we know about their numbers for the jobs that they reported on Friday and they're better than expected. That's good right? Job numbers earlier this month, payrolls supposedly expanded by over 151,000 jobs. That's great. I mean, look at the headlines here. It's fantastic.
Bad news here: They misled you. They misled you. Some people would say they lied to you but those would only be people like me. The government changed the seasonal adjustment. They changed that formula so they could make the -- boost the job numbers, the number of jobs created in October by 100,000 jobs.
But over at Tapped, Tim Fernholz already debunked this claim, which was previously pushed by Henry Blodget. Fernholz wrote:
When the BLS collects data from businesses -- the “establishment survey” -- to track the number of jobs, it wants to capture meaningful economic trends. That means the number most people focus on is “seasonally adjusted,” so that we factor out the change in jobs related to holidays, the weather, and other temporary stimulus -- we just want to see the overall trend in the labor market. Blodget and his sources charge that the BLS is manipulating the seasonal adjustment process to create “phantom jobs”:
[In October 2010], the seasonal bar which the payroll data must jump was (inexplicably and dramatically) lowered from prior Octobers... Thus, in October 2009, the BLS set the bar at 870,000 jobs, similar to the 840,000 it anticipated in October 2008. This year, by contrast, it lowered the bar to 768,000. Mumbo, jumbo, payrolls presented “an upside surprise” of 100,000.
I spoke with Chris Manning, an economist who is the National Benchmark branch chief and a 15-year veteran of the BLS. Manning explained that seasonal adjustment process hadn't changed in October. As ever, it was run by X-12-Arima, software that averages the last 10 years of October jobs data to get a sense of how many jobs are typically created. It also weighs other factors, including the usual change from September to October, and the length of the month (more on this later) to create the number that Blodget's sources complained about -- the “bar” above which we count employment gains as seasonally adjusted.
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As you can see, the October numbers from 2008 and 2009 that Blodget's sources found so damning are actually outliers themselves. Manning suggests one explanation for that: In 2008 and 2009, the measuring period for October -- from the week of the 12th of September to the week of the 12th of October, known as “reference weeks” -- was five weeks long, not four, so X-12-Arima would have priced-in a larger-than-expected change in employment than in a four-week period.
From the November 15 edition of Fox News' Glenn Beck: