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Sunday, May 29, 2016

The War on Data

by Calculated Risk on 5/29/2016 10:38:00 AM

People have different priorities and different values. But we share the same data.  Over the last few days, we've heard a presidential contender make comments completing ignoring the data.   This should concern everyone - ignoring data leads to irresponsible comments and poor policy decisions.

First, I live in California, and I was shocked to hear Donald Trump say there is no drought in the state.  That is the opposite of what the data says!

Here is an excerpt from Daniel Swain at the California Weather Blog (written 10 days ago discussing the data):

While the reservoirs in California’s wetter, more northern reaches have reached (or are nearing) capacity after a slightly wetter-than-average winter in that part of the state, multi-year water deficits remain enormous. The 2015-2016 winter did bring some drought relief to California, but nearly all long-term drought indicators continue to suggest that California remains in a significant drought. Residents of Southern California–who witnessed a much drier than average winter this year despite the occurrence of one of the strongest El Niño events on record–can certainly attest to this. In fact, nearly all of California is still “missing” at least 1 year’s worth of precipitation over the past 4 years, and in Southern California the numbers suggest closer to 2-3 years’ worth of “missing” rain and snow. These numbers, of course, don’t even begin to account for the effect of consecutive years of record-high temperatures, which have dramatically increased evaporation in our already drought-stressed region.
emphasis added
For the current year, these tables show the snowpack in the North, Central and South Sierra. Currently the statewide snowpack is about 29% of normal for this date.

Tyndall CreekThis graph shows the snow water content for Upper Tyndall Creek for the last 20+ years.

For Pacific Crest Trail and John Muir Trail hikers, I recommend using the Upper Tyndall Creek sensor to track the snow conditions. This is the fifth dry year in a row along the JMT - although more snow than the previous four years.

As Swain noted, "California remains in a significant drought". Mr. Trump's comments were incorrect and irresponsible.

Second, Mr. Trump was also quoted as saying that anyone who believes the unemployment rate is 5% is a "dummy".
Trump says he thinks the US unemployment rate is close to 20 percent and not the 5 percent reported by the Labor Department.

Anyone who believes the 5 percent is a “dummy,” he said.
I don't believe the headline U-3 unemployment rate tells the entire story, and that is why I also track U-6 (a measure of underemployment) and other measures.  But U-3 is measured in a transparent way - and remains a key measure of unemployment - and is measured consistently.

When we use U-6 (includes "unemployed, plus all marginally attached workers plus total employed part time for economic reasons") we need to compare to previous readings of  U-6, not previous readings of U-3.   Currently U-6 is at 9.7%.  U-6 bottomed in 2006 at 7.9% and in 2000 at 6.8%.  So U-6 is still elevated and there is still slack in the labor market.

Also, some people think the participation rate will increase significantly as the labor market improves.  I've written about the participation rate extensively, and I've pointed out that most of the recent decline in the participation rate can be explained by demographics and various long term trends.  There is no huge hidden pool of workers that will suddenly show up in the labor force.

Looking at the data, Mr. Trump's suggestion that unemployment is closer to 20% than 5% is absurd.

I guess Trump thinks I'm a "dummy"!  I think he is reckless and irresponsible.