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Response to stockholmer (Reply #30)

Fri Jul 6, 2012, 02:25 PM

38. Interesting Tactic

You cut and paste someone else's post from a different forum. Which required almost no effort on your part. But to debunk it (because almost everything claimed is wrong) I'd have to spend a lot of time and effort addressing each point.

But ok, let's do some highlights off the top of my head without research:
It is a poll. They call people and see if they have a job, looking for a job, unemployed, etc. Polling data traditionally has wide margins of error as well as you can create questions to generate the answers you WANT.

It is a survey. Initiation into the survey is a personal visit from a census worker. The margins of error are not wide because it is a well-designed survey. Margin of error for the Unemployment level is +/- 2.9% But your source wants to add in Discouraged workers...but that has a margin of error of 12%. So he's complaining about margins of error, but wants to make it worse? And no, the questions can't be changed: they're published and standard: http://www.census.gov/cps/methodology/questions.html

"Discourage Workers" - Clinton stop counting those people who are unemployed, but no longer looking for work. By labeling them, we no longer count them as unemployed.
Untrue. Until 1967, some discouraged workers were included, but not systematically. They were included as part of an alternative method in the 70's. Under Clinton, a time limit was established, but that's it. He didn't remover them from the UE rate.

Temp/Part time - Bush increase the use and definitions of temp and part time workers into the employment numbers, making it look better than it is.
I can't find anything to support any changes of definition or use of temp or part time under anyone.

The U6 is NOT how things used to be. The U6 includes part time for economic reasons (NEVER considered unemployed ever by anyone) and the Marginally Attached (which includes Discouraged) which was never a category before 1994.

Hedonics - this alters the price of a good, based on the technology benefit it has to the consumer. Example, you can use the iPhone to surf the internet, so it serves two purpose, so instead of reflecting the actual cost of product, they adjust it lower to reflect the technology benefit.

Hedonics is a statistical model to account for quality change that can't be directly measured. When you're measuring price change you HAVE TO compare the SAME item month to month. If the item changes, it's no longer the same item. Hedonics is mostly used for clothing, such as if a dress was 95% cotton and now 90% cotton but the price hasn't changed, that would be recorded as a price increase because you're paying the same amount for lower quality.

CORE CPI is preferred by finance type because the volatility of food and energy can distort the trend. Long term trends are better measured by the core CPI. Sometimes core is higher, sometimes lower.


Substitution - initaily this was argued that if the price of steak increase, the consumer can purchase hamburger.
BLS doesn't use substitution like that at all. The experimental Chained CPI does allow substitution, but it's not at the collector's discretion...it's a statistical model where changes in the amounts purchased (reflecting taste) change. But it's all for the SAME STANDARD of LIVING.

Geometric Weighting - goods have always been weighted in the index, but now geometrical weightings have pushed some goods higher that drop in value, while certain goods with higher volatility are weighted lower.

Not quite. Geometric mean weights a lesser change in price more than a greater change. The arithmetic mean gives the upper bound of change...the maximum possible change. Which is obviously not accurate. Geometric mean is more realistic.

Commodities - Soft Commodities (Food and Energy) have shorter life cycles to market (1-6 months) that certainly impact the "head line" inflation number, even with all the model changes. However, Hard Commoditeis (Iron, Copper, and other raw materials) have a longer time to market (mining -> refining -> manufaturing -> finished goods -> inventory). It can take 6 -18 months (and longer depending on inventories) before higher commodity prices trickle down to the consumer (in the CPI measure)
ummm raw materials aren't part of the CPI....CONSUMER PRICE INDEX. The PPI does measure raw materials, though.

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mahatmakanejeeves Jul 2012 OP
Inuca Jul 2012 #1
IamK Jul 2012 #2
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SoFlaJet Jul 2012 #13
stockholmer Jul 2012 #35
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Firebrand Gary Jul 2012 #5
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Citizen Worker Jul 2012 #40
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LineLineLineLineLineReply Interesting Tactic
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