Validating Statistical Analysis

Apparently, the unemployment picture in California is worse than officials
had identified.  According to a new report on statewide employment trends,
employers across the state shed 871,000 jobs in 2009.  Far more than original
estimates based upon the monthly surveys, but not necessarily based upon the
U-6 unemployment numbers that can be found at the Bureau of Labor Statistics
and those shared to our readers at the California Business Minute.

             

But it apparently comes as somewhat of a surprise to the people involved.  An article
in the Contra Costa Times, California Job Losses Grow by George Avalos, March
1st, it quoted an economist with the state who was caught off guard by the revision. 
"The economy was a lot worse than everybody thought," said Howard Roth, chief
economist with the state's Department of Finance. "The job market is weaker than
we figured."  How can this be?  EDD reported as recently as Jan. 22 that California
employers cut 579,000 jobs from payrolls in 2009. However, the revision illustrates
292,000 more lost jobs.

Again, quoted from the article, "If it comes to that number, it would be one
of the biggest revisions ever," said Paul Wessen, an economist with the state
EDD. "I can't remember a revision this big since the early 1990s, when we lost
a lot of aerospace jobs."

So why are the job losses so much worse than first thought?  EDD's monthly
estimates depend in part on a survey of a limited number of employers. A more
extensive review is showing other outcomes.

Again quotes from the Contra Costa article: "Businesses went away and no longer
existed that we originally thought were there," said Dennis Meyers, an economist
with the state finance department.

"When you have a recession this severe, you can have a variation like this,"
added Wessen, the EDD economist. "The monthly payroll survey predicts the
direction the economy is heading. But it often doesn't get the magnitude of
the change." 

While the response by those involved in the revise shed new light on the recession,
it also shows the need to get the statisticians out of the Capitol periodically to go out
and look around to validate their analysis  Meanwhile, our tax dollars are paying for
this type of analysis statistically speaking.

NOTE:  Are you unemployed?  Let's us hear from you and your opinion, specifically if
your unemployment checks have been delayed, or if you have been denied unemployment
or have had to challenge the findings of EDD staff to get unemployment.



TJohnson@CaliforniaBusinessMinute.com