Source: New York Times
Who do you believe: The people who write other people’s payroll checks, or the folks who pay themselves?
That’s the discrepancy between the two key payroll surveys. This is not a matter of semantics or obscure statistical theory: The interpetation of this data divergence of the most commonly referred to surveys is the key to determining whether we are in a self sutaining recovery or not. And that will have a significant impact on policy makers: Whether the FOMC changes their bias language tomorrow, and how soon thereafter they start raising short term interest rates.
Ultimately, this issue — in conjunction with the situation in Iraq — will be the determinant of the 2004 Presidential election.
Here’s what the NYT had to say on the matter:
“The self-employed are a group that statisticians have a hard time dealing with, and the apparent growth in that group may or may not be a good sign for the economy. Some people who say they are self-employed may really be out of work and trying to bring in money as consultants or freelance workers. Others may be doing very well, living a dream of boss-free success.
In any case, the government reported that the number of self-employed workers rose by 156,000 last month, to 9.2 million. That gain was a primary reason that the unemployment rate dropped to 5.9 percent.
The number of people on nonfarm payrolls – a number that excludes the self-employed – rose just 57,000, far less than expected, and that led most analysts to call the report a disappointment.”
Grasping at the Statistics on the Self-Employed
By Floyd Norris
NYT, December 6, 2003