seasonal adjusments

Bernanke: No QE3 Wall Street, Congress Get it Together and We Need Jobs

bernakeFederal Reserve Chair Ben Bernanke gave testimony before the Joint Economic Committee and the doves fell from the sky. Bernanke cut short Wall Street's addict like demand for more quantitative easing and instead suggested a host of policies to boost hiring and real economic output.

On the labor markets, Bernanke's testimony validated our analysis, that one cannot blame the pathetic jobs market on the weather.

More-rapid gains in economic activity will be required to achieve significant further improvement in labor market conditions.

In fact, Bernanke suggested the next FOMC meeting discussion question will ask: Will there be enough growth going forward to make material progress on the unemployment rate?  This is good, Bernanke realizes the #1 threat to the U.S. economy is the jobs crisis.

The Fed Chair also warned on the ongoing sovereign debt crisis in the Eurozone:

You Can't Blame The Economy On The Weather

The pathetic jobs report has ushered in a whole new blame game on the weather. January through March 2012 had the warmest temperatures on record for the United States.

Most economic data, including the employment report, is seasonally adjusted. The algorithm is called X-12-ARIMA and is maintained by the Census. Without going into the mathematics, this algorithm takes past cyclical patterns that are predictable and adjusts those spikes, attributed to the seasons. The algorithm takes out of an economic data series those wild swings, so one can more easily compare real growth instead of, say, fall harvesting or Christmas hiring. Construction employment, for example, is highly cyclical due to the nature of the work. Below is a graph of not seasonally adjusted construction employment.

construction nsa