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Culture War Roundup for the week of October 30, 2023

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This is a lot of words to write, "I don't understand why aggregate statistics don't apply to the individual".

Subsets of aggregate data can move in different directions from the summary statistics of the whole dataset. Trying to understand why people don't take selected macro statistics as gospel truth about their own lives is, to use a common phrase, extremely out of touch.

And stuff like this:

  1. Republicans think the economy is doing absolutely terribly, much worse than Democrats think, and 3) that most of this perception difference is because Biden, a Democrat, currently occupies the White House.

Is bordering on outright delusional. There are more Americans than just Democrats and Republicans and you don't get 55% fair/poor personal financial situation from just Republicans (no matter how much I'd love for 55% of Americans to be Republicans, alas).

What's actually going on here is that the chattering classes and the politicians and bureaucrats they support are finding, once again, that they can't actually tell people what to think about their personal lives. It's baldly obvious that this group doesn't actually know what they're talking about any functionally better than most people and that their ability to cite macro statistics is more an attempt to cast a magic spell than a real explanation of ground truth.

Trying to understand why people don't take selected macro statistics as gospel truth about their own lives is, to use a common phrase, extremely out of touch.

It depends on the purpose of the discussion.

Is it to discuss policy? Is it to discuss aggregate public perception? Averages matter.

Is it to vent? They don't.

The question to ask: why are we on this forum?

Is it to discuss policy? Is it to discuss aggregate public perception? Averages matter.

Which averages matter a lot.

Of course, there is no real policy discussion going on with these discussions of macro statistics. It's just Lefty professionals sneering at the rest of the country and saying, "Why won't you just do what I tell you and vote for the Democrats?"

Again and again, I see people here assuming that because the press and twitter academics are biased, it obviously implies that stats nerds in the BEA and BLS are biased. But, again, I've never seen evidence for this.

Reasons for skepticism:

  1. For a while, the numbers differed material from ADP’s numbers until ADP figured out the adjustment BLS was making. Generally you’d expect these numbers to be somewhat similar but BLS was running materially different and hot for awhile. So it wasn’t just the difference but the consistent direction of the difference.

  2. Job numbers continue to surprise the market to the upside sometimes beating expectations by multiple sigmas. That shouldn’t statistically happen MoM unless something screwy is happening with the numbers.

  3. I forget how many consecutive months there was a downward adjustment to the numbers but it was a number of months. Curious again the uniform direction.

  4. The establishment and household departed pretty drastically.

  5. Given what we’ve seen the last five years about DC bureaucracy why should we assume the BLS is different?

Just to be clear, from your points it looks like you've completely abandoned the topic of inflation, right? We're now dealing entirely with job numbers?

  1. I would love a link to know what you are referring to here. The only discussion I've heard around that topic is adjusting for seasonality, but that shouldn't cause a "consistent direction of the difference".
  2. The normality assumption is rarely perfectly matched and multi-sigma events happen all the time. This is an oft-recurring them in my job. I'm not sure what job numbers surprising the market has to do with proving the job numbers are bullshit.
  3. All that is evidence for is that errors aren't always independent month-to-month. Again, as anyone who has worked with real data will tell you (especially time series) independence is almost never a valid assumption. Real life is not Stats 101.
  4. What does this mean? Is this just "lived experience". If so, the one time someone on this forum provided their receipts, they closely matched the official data. So, I'm not seeing this.
  5. Because virtually all charges I've seen levied on this forum that have evidence are about politicians/academics/journalists being biased and misinterpreting data or intentionally emphasizing certain data over others to serve a narrative. I don't think I've ever seen anyone on this forum provide evidence that nerds outputting the metrics are biased, let alone that they're falsifying metrics or following biased methodologies.
  1. ADP is a payroll company. They put out numbers. The numbers generally are close to BLS because well ADP is the primary payroll provider in the US. About a year ago, there started to be a pretty big divergence.

  2. Some of the beats were something like six sigma. It is weird to have that many very large sigma events on one data source.

  3. Yes of course things aren’t independent. My suggestion is it isn’t independent because the BLS is cooking the books.

  4. There are two data points BLS puts out. The first is establishment survey which goes into unemployment number. The second is the household survey. Granted, the latter is measuring something slightly different. But historically these two surveys end up with total number of employed that are very similar. There has been a large difference for about 1.5 years since BLS started aggressively applying adjustment to establishment. The household correlates very well with street expectations. The Philly fed even put out a paper on this. Again, this suggests the establishment is being manipulated. Latest household suggests we are in recession range for jobs.

  1. Can you please provide a link?
  2. I'm saying is that, for anyone who works with temporal datasets, what you are saying is not much of a red flag. Unless there is additional context (maybe a link?).
  3. Again, for anyone who works with temporal datasets, what you are saying is not much of a red flag. Unless, again, there is additional context (maybe a link?)
  4. "The Philly fed even put out a paper on this" - can you provide a link?

I don’t have a link to the ADP. I remember seeing the beats when they come out.

Re 2 and 3, show that historically we often see these kinds of beats in something as important to markets as unemployment numbers. Until then I think multiple multiple sigma beats to the upside (followed by uniform revision downward adjustments of prior month) is suggestive of something.

Re 4 had trouble finding the paper but here is a Forbes link discussing it. https://www.forbes.com/sites/greatspeculations/2022/12/23/upon-further-review-that-hot-labor-market-is-really-ice-cold/?sh=23befc8c72b5