Front Page  »  

New local economic forecast based on misleading numbers

November 6, 2010

Brad Kemp

By KAREN VELIE

Economists hired by business leaders in San Luis Obispo County said the local economy appears to be showing signs of recovery while providing seemingly misleading numbers to attendees at the first annual Central Coast Economic Forecast held at Embassy Suites on Friday.

According to Brad Kemp, an economist with Beacon Economics in Los Angeles, the local unemployment rate had fallen from 10.7 percent in August 2009 to 9.9 percent in August 2010, demonstrating a county in the early stages of economic recovery. However, the adjusted unemployment rate for August 2010 is 10.3 percent, according to the state’s Employment Development Department report.

Each month, the state provides preliminary unemployment numbers that often change after further review. In addition, the numbers regularly zig zag up and down throughout the year.

Kemp told the audience that employment gains in the manufacturing and construction industries provide further evidence that the county’s economic downturn appears to have ended.

However, according to the state’s Employment Development Department’s monthly reports, approximately 400 people lost jobs in the construction industry from August 2009 through August 2010. During the same time period, the number of local manufacturing jobs remained primarily unchanged.

Kemp also said that tourism driven by the area’s wine industry was helping to fuel the economy. He did not mention that 700 people employed in the hospitality industry lost their jobs from August 2009 through August 2010.

The September preliminary unemployment rate sits at 10 percent.


Loading...
Related:


31 Comments
Inline Feedbacks
View all comments

As soon as a media starts reporting a recession they start with the ” ….appears to be recovering” crapola. Ecomomists opinions vary so much as to cancel out each others claims totally. The U.S. economy was built on Federal reserve shenanigans. Greenspan should be in an electric chair. Until we realize what and WHO owns and runs the worlds central banks we are slaves to them. They run the world and have just completly taken over world politics. They have recently been termed “banksters”. Banks make money by putting and keeping people in debt. How? Simple, lend gobs of printed money out for mortgages or whatever which raises the price of these things. People don’t have the saved funds for these “whatevers” and have to finance. Bingo, you have indebted, unableto save anything people whose money goes out in interest to all te international investors.That is how to drain acountry’s weallh. Everyone is scared to even talkabout the Federal reserves. Some are afraid of being called anti-semetic, othe entities such as media know not tor rock the boat & risk their own financial stability. The Fed caused the ’29 crash to enable fat cats to scarf on devalved assets. Their mandate is to keep a luke warm economy running steadily and smoothly but that doesn’t make any investor money. Money is made on market movement up OR down. Steady as she goes doesnt make money for te elite. People need to wakeup, study the workings of banks internationally and who owns and runs them, lest you continue to enrich them. I dare anyone reading tis to total up all interest, insurance an taxes they pay. More than half your income? That’s called socialism. Bernacke? Same thing, bailout the banksters, burn everybody else. Why don’t people see what’s going down?? They’re HYP-NO-TIZZZED. IT’S THE BANKS, STUPID


0

The rate of interest on the national debt created by Ronald Reagan handed to President GHB: 19.5%(compound quarterly) no wonder the banksters do so well .


0

Hello, Beacon. Anybody home?


Taking the percentage of seasonally adjusted unemployment from LA in August

does not work for SLO County. According to the EDD website, the numbers in LA

were seasonally adjusted for August because more than 10,000 public school

teachers went back to work in the middle of September. In SLO County, most

public school teachers went back to work in August. So the same adjustment

would not be relevant in SLO County.


If you take a look at the seasonal adjustment for September in LA, it is

almost non-existent. If you look at the EDD website, they don’t just say

adjust up or down, they explain why. Kemp: please explain which industry

caused you to take a 10.3 percent unemployment rate and seasonally adjust it

to 9.9 percent in August 2010.


Also, how can you claim the number of construction jobs that increased from

January to August is not seasonal? January is our rainy month. Most

construction work stops for a few months in the winter. I know you do not

get as much rain in LA as we do, but you should have considered the

differences in our counties and not just taken the percentage numbers for

LA.


0

We only mentioned LA because it is the only MSA which has both its employment and unemployment rate released from EDD seasonally adjusted. But the seasonal adjustment program analyses the historical non-seasonally adjusted data that is fed into it, identifies that area’s seasonal pattern and makes the appropriate adjustments. Thus the SLO seasonally adjusted data is adjusted based on the SLO seasonal pattern.


Remember that seasonally adjusted data allows us to look at month-over changes to see the net economic effect. In the seasonally adjusted data we could compare the January industry employment and August industry employment numbers, but I will state again, I did not do that. I calculated the the average monthly job creation from January to August in 2010 against 2009. This is an accurate method to look at industry performance from one year to the next.


0

This is in response to the post by Karen Velie, “New Economic Forecast Based on Misleading Numbers,” (November 6, 2010). Ms. Velie commits serious – and very basic – analytical errors in her response to the information presented by Brad Kemp of Beacon Economics.


First, is a rather astonishing lack of understanding between seasonally and non-seasonally adjusted data. In her article, Ms. Velie quoted San Luis Obispo County’s (SLO) August unemployment rate at 10.3%. This is a non-seasonally adjusted unemployment rate. California’s Employment Development Department (EDD) does not produce seasonally adjusted unemployment rates for any county or MSA – except Los Angeles County as required by the Bureau of Labor Statistics. The employment data presented by Beacon Economics at the recent Central Coast Economic Forecast Conference was seasonally adjusted – explaining the disparity between the numbers presented in the forecast and the numbers quoted by Ms. Velie. Notations that Beacon Economics’ data is seasonally adjusted appear on the presentation slides and in the forecast book. Brad Kemp also verbally noted in his presentation that the numbers were rendered on a seasonally adjusted basis. Beacon Economics uses the same seasonal adjustment program the EDD uses to adjust its Los Angeles numbers. Seasonal adjustment is a critical step in conducting drilled down analysis. It smoothes out a data series, removing the anticipated seasonal employment swings and allowing analysts to look at underlying – and more accurate – economic changes. You can find all of Beacon Economics’ seasonally adjusted data for San Luis Obispo (as well as any MSA in the nation) published at this link.


Second, Ms. Velie incorrectly refutes employment gains in the construction and manufacturing sectors – and does not appear to understand the significance of these gains, however small. In his presentation, Brad Kemp mentioned a number of industries that have turned the corner from employment declines in 2009, to growth in 2010. While construction and manufacturing are the smallest in size in term of that transition, they did indeed transition and are particularly notable because in most areas throughout California, these two sectors are still in decline. The numbers Ms. Velie quotes would never be able to prove or disprove the issue of a polarity change from losses to gain when just looking at August 2009 data and comparing it to August 2010, not seasonally adjusted. Both Construction and Manufacturing in SLO have fewer jobs than they did the year before but that does not negate the fact that each of these two industries had more jobs in September of 2010 than were available in January of 2010. While both Manufacturing and Construction lost an average of 7.3 and 13 jobs per month, respectively, in 2009 – they added 5 and 1.8 jobs per month, respectively, in 2010. To set the record straight, Brad Kemp reported in his presentation that, overall, the County’s labor market was at best flat due to a battle between the industries that are growing and those that are still losing jobs.


Lastly, never in his presentation did Brad Kemp say the pain of the recent economic downturn was over. He stated that while the recession had been declared officially over by the National Bureau of Economic Research, the recessionary effects will be felt for some time to come. He said that while it was important to recognize that the region was the road to recovery, that recovery would be slow to gain momentum with the continued uncertainty in real estate markets and looming threats of government deficits and inflation.


The misleading “story” Ms. Velie tells in her article is discreditable. It is at best, a lack of sophistication with regard to employment data analysis, and at worst, an example of ‘not letting the facts get in the way of a good story’. There is a high level of complexity underlying employment data analysis and reporters writing about it should acquire at least a basic understanding of how it is developed and rendered to prevent misinforming the readers who depend on them.


Victoria Pike Bond

Director of Communications

Beacon Economics


0

Sorry Miss-Long-Name-Obviously-From-L.A. – We simply call them how we see them here and this smells like another sham presented by a shiny suit!


0

Back on topic –

Content removed by moderator at authors request.


0

You are badly misinformed. Brad Kemp from Beacon Economics has never worked for Countrywide Home Loans or any bank or mortgage company. His full bio can be found at www. beaconecon.com.


0

In my haste to post, I now realize I have confused Brad Kemp with Mark Kemp of Countrywide Financial (another local economist).


Please accept my apologies and delete my previous post.


0

Thanks DeepBlueSLO.


0

off topic opinion removed.


0

Once again Karen and CalCoastNews nail it. She and I agree that some purpose, quite specific, is at the root of this annual public relations sham. I will explore this issue in depth on my site, http://www.KCCN.tv, and welcome input from others who can help shed light on what is obviously an organized scheme with intent. I’m planning a 15-20 minute mini-documentary on the subject and can be reached at djblackburn@charter.net.


0
1 2