‘Seasonally Adjusted’: Is Housing Market Improving, or Not

[Geee]

PJMedia:

Attempting to interpret economic data produced by the federal government these days while merely looking at its published seasonally adjusted results is a dangerous exercise. Anyone doing so is by definition hoping that the statisticians’ concocted forest represents what’s really going on down there in the trees. Yet now, more than at any time since World War II, that is not the case.

The Department of Labor, its Bureau of Labor Statistics, the Census Bureau, and other federal data compilers generally perform their seasonal adjustment calculations based on data from the previous five years. That wouldn’t be a big problem, except for one thing: we haven’t had normal seasonal relationships since the POR (Pelosi-Obama-Reid) economy began in the late spring of 2008, almost five years ago.

 

Because of the POR economy, the influences of the recession and three straight subsequently weak “recovery summers” following on the heels of somewhat strong winters have preempted typical seasonal fluctuations.

Seasonal adjustment is a valid statistical smoothing tool: when applied in normal circumstances, it can provide a quick and reasonably reliable reading on how a particular month’s or week’s actual (i.e., not seasonally adjusted) reading compares to the immediately preceding period. But far too many people, especially those in the business press, fail to consider — because of ignorance, laziness, or both — that the seasonally adjusted numbers, even in the best of times, aren’t real (heaven help us, I’ve actually had a wire service reporter try to claim that the government considers them as such in an email).