economic statistics

What Is the Misery Index?

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There are few institutions examined more scientifically or mathematically than the U.S. economy. After all, in-depth understanding of economic conditions mean billions of dollars to the right people and policy makers. Unfortunately, a nation’s economy is a complex machine composed of an almost infinite number of moving parts. Economists seek to study and understand the economy in many ways, often by simplifying things with numbers and formulas. One of my favorite names for an economic statistic is the Misery Index. How to Calculate Misery Index The original Misery Index was surprisingly simple. You calculate the Misery Index by adding the unemployment rate to the inflation rate. The idea is that both unemployment and inflation are negative factors acting against a positive economy. By combining them, you could get some idea of how much of a headwind the economy is facing. Under this methodology, things would be worst during a time where unemployment was high and inflation was also high. Also, check out this review of Credit Karma Ironically, the Misery Index can peak right before a strong recovery. Consider a situation where there has been a recession or depression. Unemployment rises as companies lay off workers to reduce costs and …

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July Jobs Numbers

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Just a quick update today. After all, it’s Independence Day week and I’m a freelancer, so that’s double time off (without pay). The July jobs data has a slightly unusual split thanks the Fourth of July holiday. The new unemployment numbers were released on Wednesday, a day early because Thursday is a federal holiday, while the hiring numbers will come out on Friday. July Unemployment Numbers The numbers released today are for new unemployment claims. In other words, these job numbers are a measure of how many people recently lost their jobs, not how many people are unemployed, or how many are being hired. Theoretically, you could have a huge first time unemployment number and a huge drop in the overall unemployment rate if a bunch of people were hired and fired over the same time period. In real life, it seldom works that way. So, without reading too much into these employment statistics, the initial jobless claims number dropped by 5,000 to a seasonal adjusted 343,000, which is slightly less than economists were predicting, but by no means any sort of blockbuster drop. Certainly nothing here will make anyone worry about inflation. The uptake is simply that the economy …

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Job Numbers Good News or Bad News

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On Friday, the US Department of Labor released the July non-farm payroll numbers. They showed that employment rose by 163,000 while the unemployment rate was basically the same at 8.3 percent. Of course, this is an election year, which means that within minutes, the airwaves were flooded with spin about how this was good news or bad news, depending upon your political persuasion. Truth in Money How do you tell if the July nonfarm payrolls data is good or bad? Among politicians, talk is cheap. There is no need to be accurate or correct, only to color the perception of the electorate in such a manner that you garner the majority of their votes. In other words, a politician, and their supporting ecosystem of political pundits and talk show hosts have no interest in what the jobs numbers, or other economic data, actually mean. How can you tell when a politician is lying? His lips are moving. In fact, many of them have only the barest of understanding as to what the data actually says. Instead, they have their experts comb through looking for what can be characterized as good or bad and then run with whichever one supports their …

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Will the Economy Recover in 2012?

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There has been a lot of good news about the economy in 2012. With each passing month, it seems that unemployment drops further, the stock market goes higher, and the housing market… well, that’s why there is still a pretty big question mark out there. Economy 2012 Outlook Typically, after an economic downturn, the stock market leads the way (it’s a leading indicator) by rising in the months before various economic reports (lagging indicators) start rising. If all goes well, the stock market’s rise, is legitimated by improving corporate earnings and then backed up by an increase in hiring that improves the employment outlook across the economy. Once these things happen, the U.S. economy kicks into gear and things march upward until the next correction, recession, or god forbid, depression. The stock market has gone nearly straight up since the beginning of 2012. Earlier this year the Dow went over 13,000 for the first time since 2008. Not far behind, the S&P 500 index passed its 2008 high-water mark earlier this month. And, as Reuters and other report, the number of Americans filing for new unemployment benefits dropped to a four-year low. This follows the last few months of good …

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New Home Sales Rise

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Sales of new houses rose 7.3 percent, to 323,000 annual pace, the highest level in 2011. Of course, this comes on the heels of a record low just two months ago. New home sales statistics are quoted on an annual basis. In other words, if April’s new home sales numbers were what the new home sales numbers would be for every month of the year, how many new homes would be sold. So, the 323,000 new homes sold number means that there would be 323,000 new homes sold for the year. There are two important things about this latest economic data and how it will affect investors and the economy. First, the number is slightly higher than what economists were expecting. Any time a number surprises to the upside, that is good news, because it means that things were actually better than everyone thought. Second, while the number is higher, it is still very weak, meaning that IF the housing market is recovering, it is doing so very meekly. The big problem for new home sales is that there are so many existing homes for sale on the market today. Foreclosures and distressed owners continue to flood the housing market, …

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Unemployment Report Bad News for 2011 Economy Recovery

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The November jobs report came in worse than predicted. Recent reports suggesting that consumers were spending more money and that first-time unemployment claims were dropping suggested that the Great Recession might be coming to an end in 2010. Alas, the jobs report shatters that idea for the short-term. A recovery without new jobs isn’t worth the paper it’s statistics are printed on. Ongoing economic recovery requires that not just the people who are currently employed go back to spending and non-fear based economic decisions, but also that more people join their ranks. Unfortunately, that can’t happen if people are not returning to being employed. Smart money decisions will swing from taking advantage of low prices and low interest rates to saving cash. While increasing savings is good on a personal level, it isn’t necessarily good for the economy overall. The possibility that jobless benefits will begin to run out for millions of Americans only adds an additional weight to the overall economy. Put it together with States losing billions of dollars worth of Federal money from economic stimulus programs ending in 2011, and you have a lot of negatives pulling on the first quarter of 2011. The Federal Reserve’s recent …

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Economy Outlook 2010 2nd Half – June Job Losses

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Recent new that payrolls fell in June here in the U.S. is bad news for the economy, but maybe not as bad as it is being made out by the headlines. Let’s start with what the numbers are and move on to what they mean. As with all economic statistics, employment numbers are compiled from numerous sources which provide an inconsistent snapshot of job activity from around the country. These numbers are made usable by applying a consistent mathematical methodology to them. This results in numbers that may or may not be in any way accurate. What makes the statistics relevant and useful is that because they are always calculated in the same manner looking at the numbers relative to previous statistics is a valid way to analyze growth or contraction in employment. ….More about personal finance tips. Total Nonfarm Payroll US Department of Labor The “employment number” everyone is talking about today is specifically the total nonfarm payroll numbers and is based upon a combination of data gathered from surveying people (the household survey data) and surveying businesses (the establishment survey data). Much like the Nielsen ratings for television, the numbers gleaned from the surveys are then extrapolated to …

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