This Hacker News discussion revolves around the interpretation and limitations of economic data, particularly employment statistics, and touches upon broader issues of public discourse, media reporting, and economic policy.
Ambiguity and Suspicion Around URLs and Data Sources
The discussion begins with a user questioning the legitimacy of a Wells Fargo link due to its unusual URL structure, leading to a clarification that it's likely a content management system artifact. However, the underlying domain bluematrix.com still raised concerns about the source of financial data.
Reliability and Revisions of Payroll Data
A significant portion of the conversation focuses on the accuracy and revision of employment reports, specifically the ADP (Automatic Data Processing) report and the government's Bureau of Labor Statistics (BLS) jobs report. There's a recurring theme that initial payroll numbers are often revised downwards, leading to skepticism about their accuracy.
- "ADP's report has a spotty track record on predicting the subsequent government jobs report," as noted by one user.
- Another user pointed out the scale of revisions: "Government job reports this year have been revised down up to 35%."
- The phenomenon of downward revisions being followed by little fanfare was highlighted: "On the big release day the numbers are rosy and get reported to much hoopla and "told you" celebration, but then are subsequently revised downwards to little fanfare or notice."
Explaining Data Revisions: Conspiracy vs. Methodology
A debate emerges on why these revisions occur. One perspective suggests a deliberate massaging of numbers for political purposes, while others explain it through statistical methodology.
- A contrarian view argues against a conspiracy: "No, this is not the reason. The numbers that get fanfare are the preliminary BLS numbers. BLS collects data through surveys. Preliminary data are published with incomplete responses. As more employers respond, the numbers get updated. Guess which employers tend to report late? Those that are doing lots of hiring and firing. So the stable numbers come in first. Then the volatile numbers later." This was further elaborated: "Preliminary reports always underplay the direction of the change."
- Counter-arguments question this statistical explanation: "The numbers have been so consistently wrong in the same direction. It could be that there are other things going on, but simply that volatile numbers come in later doesn’t seem to explain the bias."
Nuances and Limitations of Employment Metrics
Users discuss the differences between various employment metrics (ADP vs. BLS) and the limitations of commonly reported statistics like the headline unemployment rate (U-3).
- "ADP and BLS numbers are measuring different things." One user explains: "As a rough heuristic, ADP overfits to private sector jobs and BLS overfits to government jobs. There is a popular derivative heuristic that the economy is "good" when ADP > BLS."
- A common critique is that headline unemployment rates don't capture the full picture of job market health. Concerns are raised about:
- "I could lose my six-figure job, turn around, and get hired on as a server at Applebee's for minimum wage, and the "unemployment" rate would stay the same."
- "Not to mention that it doesn't include those not actively looking for work."
The Role of Broader Economic Indicators and Data Interpretation
The discussion expands to encompass other economic indicators like real wages, workforce participation, and household income, and the importance of considering multiple metrics for a comprehensive view of economic health.
- The BLS does offer more inclusive metrics: "You of course know that we have a diverse set of metrics for unemployment that capture all of what you are talking about right?" and "The BLS does do several measures."
- Users point to specific metrics such as "real wages" and "real weekly wage data" as potentially more insightful.
- There's a consensus that a single metric is insufficient: "The problem is the media seems to only ever look at one of them at a time but we need to look at several at once to get a more complete picture."
- "Median disposable household income is probably the best measure." was a suggestion, though others debated its sufficiency.
Media Reporting and Public Understanding of Economic Data
A significant theme is the media's role in simplifying or misrepresenting economic data, contributing to a public discourse that often lacks nuance.
- "The problem is that the people making these complaints aren't reading those [BLS reports], they're reading the mainstream reporting on the BLS stats, which is extremely lossily-compressed, and then assuming this makes them qualified to criticize the underlying stats."
- The media is criticized for focusing on easily manipulated or headline-grabbing metrics: "Nobody is incentivized to share bad news about the economy. Everyone has a vested interest in the stock market rising, in keeping their jobs, and a shared desire to see things go up forever."
- A counter-argument suggests that the media is not necessarily malicious but may lack expertise: "A more likely explanation is that outside of a few specialized publications, most members of the media are just as financially and economically illiterate as the average person."
Data Currencies and the "Why Don't We Just" Disease
Users discuss the phenomenon of people fixating on a single metric and the tendency to believe they can easily improve upon complex statistical analyses.
- "It's a sign of terminal incuriosity and using only superficial and secondhand sources of information like news reports on the unemployment rate, and thinking this is enough to make you qualified to do critique."
- Another user described this as "the ‘why don’t we just’ disease”.
- The idea of improving public understanding through better education or mandatory civics classes was proposed: "It really should be part of a mandatory civics class to learn how to read them [economic metrics]."
The Broader Implications of Economic Data and Policy
The conversation touches on how economic data influences policy, the potential for manipulation for political gain, and the philosophical underpinnings of economic systems.
- Concerns were raised about the government disbanding advisory committees on economic data: "The government recently disbanded two outside advisory committees that used to consult on the numbers, offering suggestions on ways to improve the reliability of the government data." This leads to worries about "whether economic data could be manipulated for political or other purposes."
- The debate veers into the effectiveness of democracy versus other systems, the role of leadership, and the difficulty of measuring true societal well-being.
- A fundamental criticism emerges about the focus on employment itself, rather than the outcomes of employment: "The problem isn't employment. It's food and shelter. Why do we care so much if people have jobs? Because in America you will die homeless and starve without one."
Wealth Inequality and its Impact
The discussion also delves into wealth inequality, its relationship to economic health, and whether it's a relevant metric.
- Users debate whether GDP per capita or median household income is a better measure, with many arguing for the latter.
- The impact of wealth concentration on political influence and the economy is a recurring theme: "Wealth inequality matters a lot when rich people can spend unlimited amounts of money buying influence in politics and then use that influence to enact policies that favor the rich over the poor."
- There's a strong sentiment that even if aggregate metrics look good, a lack of distribution of wealth and opportunity means a significant portion of the population is not actually better off: "If corporate revenue increases, but wages stay the same, GDP per capita goes up, yet the workers aren't any better off. All that extra money is being absorbed by the ones at the top."
In essence, the discussion highlights the complexity of economic measurement, the challenges in communicating this complexity to the public, and the underlying anxieties about economic stability, fairness, and the ultimate goals of economic activity.