Tuesday, December 26, 2006

Readily Reusable Trend Data

One of the goals of this blog is to demonstrate approaches that lower the cost and time of working with trend data. Our intention is to make it possible for important trend data in any given area of interest to be available in an understandable form to a wider range of citizens including non-experts.

Trends matter. They matter a lot. Historically, only those with substantial resources of time, money, and expertise have had ready access. Despite advances in technology, these impediments to more widespread access remain firmly in place except for a few prominent exceptions (e.g access to stock market trend data).

Our thesis is that there already is enough technology in place to accomplish the goal of wider availability. On today's internet, massive storehouses of trend data are publicly available from a growing range of important areas of interest. We have discussed several of these internet web sites in previous entries (most recently focusing on the FRED data available from the Federal Reserve Bank of St. Louis).

Many of these data storehouses also include their own specialized software that makes it possible for ordinary citizens to examine trend behavior once you learn the unique rules for creating charts at that web site.

Drawbacks of this approach are several: each site is different; the range of different trend views available is limited by what the designer of the site thought were important; and the data is not readily combinable with data from other sources without applying a substantial amount of time and expertise.

This brings us to the topic of today's entry: the idea of Readily Reusable Trend Data. If the storehouse of data from each interesting web site were all converted to a common, straightforward format that was easy to understand and reuse, then it would be possible to use a single, powerful, generic trend data visualization tool to look at and analyze and play with and understand any combination of available trend data from any source.

There are many possible candidates for such a universal readily reusable trend data format. A format that has proven itself in the trend analysis work I have been doing in recent years is a Comma Separate Values (CSV) file that obeys a few additional rules that make it effective with trend data.

DEFINITION: a comma-separated values (CSV) file is simply a text file representing a two-dimensional table of rows and columns. The text file consists of a series of rows of data. The values in each row of the table are separated from each other by a comma. The Nth value represents the entry for the Nth column.

Existing table-oriented software applications such as spreadsheets and relational databases can accept CSV files as input.

DEFINITION: a readily reusable trend data file is a CSV file that obeys the following set of additional rules:

  1. the file consists of a header row and a series of data rows
  2. the header row contains the names of each trend data factor
  3. each data row represents one time interval
  4. for each time interval there is only a single row
  5. there is one column (typically the first) that shows the time for the interval represented by each row
  6. each column represents one and only one trend data factor - the value in the nth position in each row corresponds to the the nth trend data factor named in the header row

Here's an example of a readily reusable trend data file:

Time, Checking account balance, Saving balance, Total assets

Jan-06, 473, 1322, 1795

Feb-06, 841, 938, 1779

Mar-06, 143, 1222, 1365


It's easy to see how data in this format is readily reusable. For example, you could use Microsoft Excel to open this file and it would automatically arrange the data into exactly the desired two dimensional table. It would then be quickly possible to use Excel to create a variety of different trend charts using the powerful generic charting capabilities of Excel. For example, you could plot any individual factor, or all three factors together. In addition, you could decide to add features such as moving averages or perform further calculations to create a new trend series such as computing the percent of total assets represented by savings.

Ready reusability may seem simple and obvious and maybe not worth much thought. Our experience counters that impression. It turns out to be really important in helping move towards the goal of lowering the cost and time of working with trend data and making that data understandable to an ever wider range of citizens.

In an upcoming series of posts we will shift our attention to a demonstration of how the availability of readily reusable trend data combined with a powerful generic trend visualization tool (TLViz - the TimeLine Visualizer) can move us much closer to our goals.

Thursday, November 23, 2006

Normalizing trend data to bring out hidden nuances

This week's free weekly chart from Chart of the Day is an excellent example of the power available through judicious normalization of trend data. In this case, the folks at Chart of the Day take the trend series for the Dow Jones Industrial Average and combine it with the trend series for inflation (CPI) to produce a new normalized metric: Dow (Inflation-Adjusted). This brings out some hidden nuances that would not be obvious to someone looking at just the Dow and just the CPI trends by themselves.

What do you see in the chart? How does recent behavior (since 2000) compare to your previous understanding of what was happening to the Dow Industrial Average?

In addition to the skillful use of normalization, other excellent features of this chart include the appropriate use of a log scale for the Y axis, the long sweep of time covered by the chart (1925 - 2006), and the drawn in resistance-support trend line ranges for two of the periods. The accompanying text for this Chart of the Day posting also helps direct the attention of the viewer to additional aspects that might not be obvious at first glance.

The key take-away for anyone who knows what the non inflation adjusted Dow chart looks like is how remarkably different a story each of these two views tells. Having both view, gives us a better chance to try to understand what is actually happening.

To make this even better, it would helpful to have several successive zoomed in views of this new normalized metric showing 1980 to 2006, 1990 to 2006, and 2000 to 2006.

Other normalized views of the Dow such as Dow in Euros, Dow in Ounces of Gold, Dow in Barrels of Oil might add even more insight.

Wednesday, November 22, 2006

John Maudlin's Thoughts from the Frontline

John Mauldin ( john@frontlinethoughts.com ) publishes a free weekly investment newsletter. In the latest newsletter for November 17th 2006 (which you can find by signing up at Thoughts from the Frontline ) John publishes a condensed version of a guest article written by Gary Shilling on the housing market. This article includes many excellent trend charts that shed light on the details of the trends at work and how they might play out in the future.

I've included a few that I liked best here for reference. The whole article is well worth reading. What I would love to see someone address is how the liquidity growth that we can see in the recently resurrected M3 charts (see previous posts) intersects with the housing market trends.

For example, will the extra liquidity in the system change (or soften) the outcome of these trends?

General Commentary on the Charts. I liked the long time sweep of these charts and how the chart title explicitly included the date of the most recent data point (which is not always obvious in many trend charts). I also liked the way that Gary skillfully used comparison of pairs of variables to bring important features of what is going on more to the surface.

Chart 1. Note the long sweep of this chart plotting from 1990 to Sept 2006 and how these two metrics (median house price and cpi index) were initially parallel and then diverged at an accelerating rate.

Chart 2. This chart has a sweep that goes all the way back to 1890! Note how relatively stable this metric (Real Quality Adjusted House Price) was from 1950 to about 1995 and the dramatic acceleration in the last 11 years.

Chart 8. This chart plots from January 2000 through Sept 2006 and shows the Median Nationwide Single Family Home Sale Price in Red and the year over year percentage change in median home sale price in Black (right hand scale). Note the sharp spike up in the year over year percentage change in 2005 and the even sharper spike downward starting about November 2005.

Chart 10. New Home Sales Price year over year percentage change. This chart would be even better if it showed a 3 month or 6 month moving average. Note the slow slope downward starting about January 2004 and the way in which this metric falls off the cliff beginning about June 2006.

Chart 11. This chart shows the period from August 1988 to Sept 2006. This is a particularly powerful chart. It shows the relationship between total new single family home sales and Months Supply of Homes for sale. Note how the totals sales figure accelerates from about 400,000 per year in 1992 up to about 1.3 million per year in 2005 followed by a drop off to approximately 1 million per year in recent days.

Note also how stable the months supply of inventory is (ranging from 3.5 to 4.5 months) from about 1997 until 2005, and then how this metric skyrockets to over 7 months of inventory in Sept 2006.

Comment: using months of inventory has the effect of accentuating the visual impact of the curve when the sales figure is changing rapidly in either direction as the rate of sales is used in the calculation for months of inventory. A chart showing total inventory compared to total sales would show a similar pattern but with less exaggeration.

You can check out the full article at http://frontlinethoughts.com/ for more details.

Tuesday, November 21, 2006

The Big Picture: The Return of M3

Nice post this morning from Barry Ritholtz over at the Big Picture with some more commentary about the return of M3 money supply trend information . Well worth reading.

The Big Picture: The Return of M3

Friday, November 17, 2006

The Return of M3

Hat tip to Barry Ritholtz over at The Big Picture for this link to NowAndFutures.Com where they have resurrected the important M3 money supply metric that was unceremoniously dropped by the Federal Reserve earlier this year. It looks like this site has lots of other timeline views of vital metrics that will be worth studying in more detail.

Artful Comparisons Reveal Hidden Meanings

The free weekly posting at Chart of the Day - www.chartoftheday.com is often worth a look. This week's chart is a good example of how artful, carefully selected comparisons can reveal previously hidden meanings. In this case, the performance of the S & P 500 over the last 3 years (shown in grey) is compared to the performance of the Japanese Nikkei large stock index (shown in blue).

The divergence around mid year 2005 is sharp and striking. Also, the same chart makes it easy to see that the mid year 2006 correction was much steeper for the Nikkei and that both the Nikkei and the S & P 500 seem to be driving upward now at about the same rate.

If we zoomed in and looked at just the last year, or just the last 6 months and did the same comparison, different hidden meanings might come to the surface.

Bottom Line: all performance is relative so it's important to have a useful benchmark for making comparisons.

Wednesday, November 15, 2006

Creating new metrics out of thin air

The Big Picture: U.S. Treasury Yield Curve

This is a nice example of how new and important metrics can be created by recombining the values of other metrics. In this case, the 10 year US Treasury yield and the 2 year Treasury yield metrics provide the raw ingredients. The recombination is to simply subtract the 2 year yield from the 10 year yield to get the new variable or "SPREAD" which is then plotted.

This seemingly simple approach brings some trend patterns into clear view where they otherwise might have remained invisible.

My own reading of this chart is that drop off in 2000 was much sharper (almost straight down) whereas the current drop represents a much longer, slower slide into the negative yield curve territories.

To fully understand what's going on, it would be useful to check out some other spreads such the 10 year - 3 months spread. It would also be useful to easily reference the original metrics to see what their trend looks like.

Monday, August 28, 2006

Timeline Collaboration Principles

The initial starting belief of this Change Over Time blog is that if you want to change the world, the best approach is to build better tools and then learn how to harness their power.

Peter Drucker tells us that FOCUS is the key to success and we follow his advice with a focus on timelines and trend data that tracks the areas of our lives that are most important to us. A key to unlocking the meaning of these data is a continuing search for the tools and methods and principles that best help us analyze, visualize, report and discuss our findings. We are on the lookout for tools that simplify, clarify, and especially those that save us time as we share our findings and collaborate with expert and non-expert alike. We wish to discover what the data means for us in our lives and what actional steps we might take for making the world a better place.

Why do we focus on trends and timelines?

First: Timeline data is often widely available for a substantical collection of key measures in every area of human interest. We are simply overflowing with such data. Where it is not available, it appears almost always possible to create a new data collector that will gather the missing metrics.

Second: Our observation is that most of the time, the available data is not put to its best use as key principles that would guarantee success are openly violated. Lots of opportunity appears within easy reach.

Third: In one domain after another, we have been establishing and documenting proof that substantial improvements in how we use trend data are already available or well within our reach by following a straightforward set of rules and principles and we can point to a growing number of examples on the web that show these approaches in action.

Fourth: In some cases, the existing work makes collaboration (especially between expert and non-expert) somewhat easier, but the collaboration aspect of making best use of trend data does not seem to have been actively explored. I believe that a handful of principles and standard practices can help us learn how to collaborate better by at least an order of magnitude. As we do so, we will advance towards having better and better control for shaping the future and achieving our fondest dreams.

Limited examples of how to use trend data more powerfully are popping up on the web. One of our goals on this blog is to find these examples of excellent practice. We want to use these best practices as models for what is possible if the underlying principles were applied to other domains and trend data collections. For example, we gave some examples drawn from the St Louis Federal Reserve Bank's interactive trending capabilitites named FRED. Other examples can be found at The Big Picture , the Bureau of Labor Statistics, Bureau of Justice Statistics , and Professor Pollkatz .

Here are the TimeLine Collaboration Principles that I believe are going to prove most important to the goal of this blog of making the best use of trend data. We have already discussed some of these in previous posts and will be preparing additional posts for these principles to explain the logic behind them in greater detail.

1. Share the data series with the chart. Make sure it is readily reausable
2. Multi-dimensionality is key
3. Data set includes entire time range even if chart doesn't
4. Explain how calculated quantities were obtained
5. Make sure the explanatory text is in close physical proximity to the trend chart
6. Data + Charts + Text creates a full package that encourages further conversation
7. Ask the expert in the subject matter domain: What are the most important factors?
8. Then, make sure you measure and record and create a timeline history of every one of these
9. If you have the most important factors, you'll find charts with but a single variable still tell a powerful story
10. Make sure the Axes and Titles and other text graphics are easily readable

Sunday, August 27, 2006

Housing Starts & Housing Sales for Single Family

Housing has been in the news this week. These 10 year charts of single family housing starts and housing sales give a good picture of the recent reversal seen in housing.

Source: FRED's Household Sector Category from the St. Louis Federal Reserve.

Household Credit Market Debt - Year over Year % change

Here is another worthwhile chart from the FRED household category.

This is the 20 year chart showing the year over year percentage increase in Household Credit Market Debt.

The year over year increase is now about 12% following a mostly upward trend beginning back around 1992 when the annual percent increase was about 5%. This is still well below the rates seen in the mid 1980s.

Household Debt Payments as a percent of Disposable Income

Here are three view of Household Debt Service Payments as a percent of Disposable Income created from the FRED site of the St Louis Federal Reserve. You can look at this metric and other related household metrics at: Fred's Household Sector Page.

The first view is the 5 year view. This was pretty flat for 3 years, then showed a sharp upswing at the end of 2004.

The second chart shows the 25+ year view going back to 1980. Notice the upsweep from 1992 to the present (Q1 2006).

The third is the 10 year chart shows more clearly both the upsweep and 3 year pause.

I find these charts give an eye-opening view of a what has been a non-HEADLINE factor that may prove important in how our current economic situation evolves. How much debt can the US public sustain before there begins to be some push back? The more debt service, the smaller the remaining disposable income to deal with the twin factors of rising gas prices and inflation in general and stagnant real median wage.

What do you think?

Trend Watching with FRED - First Impressions

I have just started working with FRED and find it amazingly helpful and powerful and a cut above other economics related database engines out on the web that I have used in the past.

Here are some of my first observations and impressions.

a) I experienced quite high performance and rapid response time as I selected each option such as changing from 5 year view to 10 year view. I noticed consistently better response time than I have experienced with most other web db engines.

b) I loved how they had pulled trend series from many different sources and make them all available in one place. They currently are tracking over 3,000 different series from a dozen or more primary sources in a wide variety of categories.

C) the FRED graphing engine has a new feature which gives it the ability to plot a second series so it can be compared with the one you are looking at. The default option is to show these two series with a dual Y axis representation which often helps make relationships between two factors more visible. The option to plot both series on the same scale is also available and is sometimes preferable. The rapid response to shift between views makes features such as these even more valuable.

D) With a single mouse click, you can get the trend for the metric you have chosen updated for three different standard time frames of 5 years, 10 years, or max years. Similarly, you can switch between the raw data metric value and other representations such as Year over Year Percentage Change with a single click. If you click the two previous links, you will see the CPI raw data which is not very interesting and the YoY % which is much more reveailing. Sometimes these transformations reveal previously hidden and important detail. Coupled with the fast response these single click options proved very helpful at grasping both the big picture and rich detail of each factor examined. The general design of the FRED user interface provides many other options with single mouse click options. For me, this meant that it radically speeded up the time required for analysis and also improved understanding.

F) If you find a trend metric that you want to examine in more detail , FRED makes make it easy to view or download the raw data. I haven't done much with this feature yet, but it will surely prove valuable for future work.

G) the description of the each metric at the bottom of the html page is very helpful for gaining a basic understanding of unfamiliar metrics and pointing you back to the original source of the data and further documentation.

H) If you create a personal account with the St. Louis Fed, you gain the ability to create your own personalized data lists of your favorite metrics drawn from their collection of 3000+. This looks like it will prove to be a big time-saver going forward. I have only "played" with this so far, but I see this aiding my future interactions as it will let me quickly drill down to the metrics I have judged most important. The end result will be faster navigation with fewer many fewer key strokes.

K) Once you have a data list created, you can download all the data for the metrics on your list. A really handy feature of this capability is what FRED describes as "cross tabulation". If your list has many metrics that report on the same time frequency, all of these metrics will end up in a single spreadsheet page, making future work with this set of trends much simpler and saving huge amounts of time compared to the situation when each trend is downloaded separately as seems to be the (unfortunate) standard for other web db engines I have worked with.

So, bottom line, FRED looks like it is a top notch resource for anyone interested in digging beyond the Headline Numbers by watching a multi-dimensional set of trends change over time and trying to understand their meaning and importance.

I expect I will be using FRED as one of my primary sources in the coming months.

FRED - Federal Reserve Economic Data

Thanks to several references from Barry Ritholz' at his blog The Big Picture, I learned of the great trend watching work that the St. Louis Federal Reserve Bank is posting on the web site including their monthly report on National Economic Trends.

One of the things I liked especially about the National Economic Trends publication is the way it pulled key metrics together from many different economic data sources and put them all in one place. What this means is that important trends that might only have been observed by a handful of experts are readily made available to non experts who previously didn't even know of their existence. I personally found some of the charts eye opening including the ones showing household debt service and household financial obligations as a percentage of disposable income.

I also liked their clean trend graphics and the frequent use they made of showing quite long time series going back 25 years or more.

Over the weekend, I discovered and began experimenting with their excellent database and trending engine that is available free online at FRED - Federal Reserve Economic Data. My first impressions are that this is going to be a terrific resource for anyone who wishes to grasp a multi-dimensional view of what's happening economically in the US and around the world.

If you haven't already tried it out, you will be pleasantly surprised.

I'll have more to say about some of its excellent features and capabilities in future posts.

Saturday, August 26, 2006

How does a project get to be a year late?

Fred Brooks in his classic book The Mythical Man Month asks and answers this famous question (how does a project get to be a year late? ) with "One day at at a time."

The parallel question for this blog is why did it take 8 months of silence before posting this entry and the answer turns out to be the same: One day at a time.

If I decided to create the trend line for Post Per Month (PPM) for this blog, it would show a pretty serious and easy to detect square wave drop to Zero for February 2006 through July.

What will happen next ? It's anyone's guess. The issues we were discussing are still vital. The standard accepted methods for presenting trend data about how the most important metrics change over time still fall far short of what's possible with today's technology. The opportunity for better understanding, better communication, better collaboration are all still there.

Time will tell.

Trend watching is still important and there are some people out on the web who are doing a good job these days with presenting trend data in a way that encourages collaboration. Over the past 8 months I have continued to seek out and follow the ways trend data is presented. Some of my favorites sites that I think are doing a good job with trend data these days are The Big Picture, Bureau of Labor Statistics, Pollkatz and the St. Louis Fed.

What are your favorites?

Saturday, January 21, 2006

Employment - Participation in workforce by age

In the Dave Altig's Macroblog excellent post Is The Labor Market Underperforming? there are some excellent trend graphics showing the labor force participation rate by differing age groups (16-24,25-34,35-44,45-54, and 55 & up) and by gender.

The new multi-dimensionality (15 additional factors breaking down the aggregate Labor Force Participation percentage) brings out details and important insights previously invisible to the eye.

Something pretty dramatic is happening recently for the age groups 16-24 and 55 & up for both men and women.

What do you see?

What I liked about these charts:

A. The five individual series on each chart are clearly separatable and easy to understand

B. The trends for for 16-24 and 55 & up stand out clearly and provide a spur for further thought and investigation

C. The multi-dimensionality of the three charts presented all at the same time in close proximity to each other in the original post. This is an excellent example of the possible explanatory power that can be achieved through disaggregation.

D. The use of a long 32 year interval helps to give a full sweep to the trends at work for these factors

E. Dave Altig's discussion in his post of what he was seeing and his links to other sources and opinions stimulates further conversation and discussion.

What else would I like to do with this same data

If the 15 data series used to generate these three charts had been readily and directly available as a single, easy to use data set linked to the blog entry, here are some things I might have wanted to do with that data and actually had the chance to do given available time constraints.

F. Zoomed in on the interval from 1995 to 2005, or 2000 to 2005 for a closer look at the patterns at work. While the oldest and youngest age cohorts show clear patterns in the original chart, there may be forces at work in the other age groups that would become visible when we zoom in.

G. For the same reason, I would want to sequence through all 15 metrics one at a time for these shorter but still substantial intervals so that further subtle patterns could be coaxed to the surface. I would use a Y Axis scaling from the Minimum to the Maximum for that particular age and gender group to make this as easy to see as possible.

H. As I zoomed in and adjusted the Y Axis, I might also want to apply some form of smoothing if the data patterns became more erratic. I might want to replace the labor force percentage by the year over year change in labor force percentage for each factor and then possibly smooth the result again with a moving average.

I. I would want to add in some more factors and look at these individually
---1 Labor Force Participation Percentage for everyone
---2 Labor Force Participation for all Male and for all Female
---3 Labor Force Participation for 25-54 (all, male, female)
---4 Labor Force Participation for 55-64
---5 Labor Force Participation for 65 & up

J. Some further metrics showing how the population demographics of these groups are shifting year by year would also be helpful for further analysis.

K. For the group from 16-24, some further metrics showing school attendance at the high school and college level would likely help add some explanatory value. Some poverty metrics for this group would add further to the picture.

L. For the 55 & up group, factors showing participation in drawing Social Security benefits, poverty data, and data showing 401K withdrawals would add even more to the mix.

I recognize that all the Labor Force Participation metrics are in fact available from the BLS and I will be grabbing some of these as I work out the promised multi-dimensional, multi-time-interval example of Employment Situation over the next few weeks. My comments here are simply meant to indicate that if I could have grabbed the full 15 metric data set, I might have done some of that kind of work as part of this post today, much as I did with the BLS MLR Editor's desk data in a post earlier today on CPI and PPI.

"Share Me the Data"

Here's the Comma separated Value text for CPI-U and PPI as promised in our earlier post.

It's not formatted in columns so it's hard to read. Try copying and pasting it into Excel and converting text to columns and see what new views of this important data you can come up with.

Let me know if you think this is helpful to you.

Date, cpi-U y/y % change, PPI y/y % change
1-Dec-96, 3.3 ,2.8
1-Jan-97, 3.0 ,2.5
1-Feb-97, 3.0 ,2.2
1-Mar-97, 2.8 ,1.5
1-Apr-97, 2.5 ,0.8
1-May-97, 2.2 ,0.4
1-Jun-97, 2.3 ,-0.1
1-Jul-97, 2.2 ,-0.2
1-Aug-97, 2.2 ,-0.2
1-Sep-97, 2.2 ,0
1-Oct-97, 2.1 ,-0.3
1-Nov-97, 1.8 ,-0.7
1-Dec-97, 1.7 ,-1.2
1-Jan-98, 1.6 ,-1.7
1-Feb-98, 1.4 ,-1.5
1-Mar-98, 1.4 ,-1.5
1-Apr-98, 1.4 ,-0.9
1-May-98, 1.7 ,-0.8
1-Jun-98, 1.7 ,-0.7
1-Jul-98, 1.7 ,-0.2
1-Aug-98, 1.6 ,-0.8
1-Sep-98, 1.5 ,-0.9
1-Oct-98, 1.5 ,-0.7
1-Nov-98, 1.5 ,-0.6
1-Dec-98, 1.6 ,0
1-Jan-99, 1.7 ,0.8
1-Feb-99, 1.6 ,0.5
1-Mar-99, 1.7 ,0.8
1-Apr-99, 2.3 ,1.2
1-May-99, 2.1 ,1.4
1-Jun-99, 2.0 ,1.5
1-Jul-99, 2.1 ,1.5
1-Aug-99, 2.3 ,2.3
1-Sep-99, 2.6 ,3.1
1-Oct-99, 2.6 ,2.8
1-Nov-99, 2.6 ,3.1
1-Dec-99, 2.7 ,2.9
1-Jan-00, 2.7 ,2.5
1-Feb-00, 3.2 ,4
1-Mar-00, 3.8 ,4.3
1-Apr-00, 3.1 ,3.6
1-May-00, 3.2 ,3.7
1-Jun-00, 3.7 ,4.4
1-Jul-00, 3.7 ,4.3
1-Aug-00, 3.4 ,3.4
1-Sep-00, 3.5 ,3.5
1-Oct-00, 3.4 ,3.7
1-Nov-00, 3.4 ,3.8
1-Dec-00, 3.4 ,3.6
1-Jan-01, 3.7 ,4.8
1-Feb-01, 3.5 ,4
1-Mar-01, 2.9 ,3
1-Apr-01, 3.3 ,3.7
1-May-01, 3.6 ,3.9
1-Jun-01, 3.2 ,2.6
1-Jul-01, 2.7 ,1.4
1-Aug-01, 2.7 ,2
1-Sep-01, 2.6 ,1.6
1-Oct-01, 2.1 ,-0.3
1-Nov-01, 1.9 ,-1.2
1-Dec-01, 1.6 ,-1.6
1-Jan-02, 1.1 ,-2.7
1-Feb-02, 1.1 ,-2.6
1-Mar-02, 1.5 ,-1.6
1-Apr-02, 1.6 ,-2.1
1-May-02, 1.2 ,-2.9
1-Jun-02, 1.1 ,-2.3
1-Jul-02, 1.5 ,-1.2
1-Aug-02, 1.8 ,-1.5
1-Sep-02, 1.5 ,-1.8
1-Oct-02, 2.0 ,0.7
1-Nov-02, 2.2 ,1
1-Dec-02, 2.4 ,1.2
1-Jan-03, 2.6 ,2.5
1-Feb-03, 3.0 ,3.3
1-Mar-03, 3.0 ,4
1-Apr-03, 2.2 ,2.4
1-May-03, 2.1 ,2.5
1-Jun-03, 2.1 ,2.9
1-Jul-03, 2.1 ,3
1-Aug-03, 2.2 ,3.5
1-Sep-03, 2.3 ,3.5
1-Oct-03, 2.0 ,3.4
1-Nov-03, 1.8 ,3.4
1-Dec-03, 1.9 ,4
1-Jan-04, 1.9 ,3.3
1-Feb-04, 1.7 ,2.1
1-Mar-04, 1.7 ,1.5
1-Apr-04, 2.3 ,3.7
1-May-04, 3.1 ,4.9
1-Jun-04, 3.3 ,4
1-Jul-04, 3.0 ,3.8
1-Aug-04, 2.7 ,3.3
1-Sep-04, 2.5 ,3.3
1-Oct-04, 3.2 ,4.5
1-Nov-04, 3.5 ,5
1-Dec-04, 3.3 ,4.2
1-Jan-05, 3.0 ,4.1
1-Feb-05, 3.0 ,4.7
1-Mar-05, 3.1 ,5
1-Apr-05, 3.5 ,4.8
1-May-05, 2.8 ,3.6
1-Jun-05, 2.5 ,3.7
1-Jul-05, 3.2 ,4.7
1-Aug-05, 3.6 ,5.3
1-Sep-05, 4.7 ,6.9
1-Oct-05, 4.3 ,5.9
1-Nov-05, 3.5 ,4.4
1-Dec-05, 3.4 ,5.4

cpi-U y/y % change +++ Year over Year change in percentage for CPI-U
PPI y/y % change +++ Year over Year change in percentage for PPI"

NOTE: data is not seasonally adjusted

"MLR Editor's Desk Update - Week of January 16-20, 2006",,
Percent change over preceding 12 months,,
Consumer Price Index for all urban consumers cpi-U,,
Produce Price Index ,,
not seasonally adjusted,,
December 1996-December 2005,,

Crude Oil Production By Country

Here's a great chart from Chart of the Day showing Crude Oil Production By Country over the past 45 years.

I like the long sweep of time and the way that 5 key factors are presented on a single chart in a fashion that each individual factor is readable.

What questions does this chart raise for you? What else can you already see here that is not included in the text of the Chart of the Day posting?

If they had shared the underlying data for these time series,

a. I would have liked to add all 5 countries together to see what their aggregate production looked like and

b. compared that as a percentage of the total world wide production figures ( a key factor not included in the data they presented).

c. I would have also liked to look at the patterns for just the past 10 years in more close-up detail.

Since they did not share their data, what I have in mind is theoretically possible, but effectively impractical due to the order of magnitude time requirements to dig up this data myself in an area that I have not worked on previously.

Sharing the data: Why is this so important?

In the previous post, we showed some nice Bureau of Labor Statistics (BLS) trend charts for the Consumer Price Index and the Producer Price Index covering the the past 10 years and showing year over year changes on a monthly basis.

The BLS kindly provided each of these charts with its own "pedigree papers" - the underlying data set for the factor in question over the time period shown. This is rarely done today for reporting on the internet or in print.

When someone shares their data as in this case, it opens up the possibility for further fruitful conversations. Here's an example of what I am talking about.

Using the BLS data, I was able to create the charts below in a relatively small number of minutes. I liked what the BLS had done, yet I also had a theory that perhaps some further smoothing might make the patterns easier to read or understand. With the 6 month moving average of these year over year percent changes in CPU-U, the upward thrust of this key factor over the past year stands out more clearly.

----------------NOT SEASONALLY ADJUSTED-------------

Looking at the BLS charts for CPI and PPI, I wondered how these two key factors were related. Again, because BLS provided the data for both factors, I was able to create this second chart that shows both of these key factors together. From this new chart, one might theorize that the rapidly rising PPI over the past 2+ years has been a factor in dragging the CPI higher over the same period.

What do you see? What do you think?

----------------NOT SEASONALLY ADJUSTED-------------

Sharing the data: This is important because the same data can be presented in many different ways and used to test many different theories. If an analyst or reporter pulls together a data set and then shares a small number of charts (quite commonly only one chart) and does not share his or her data, then further analysis is made more complicated and more expensive by a factor of 10 or more.

Ready Reusability: The BLS data made the work above possible within the time constraints that I am operating under today. However, my job could have been even easier if these two related metrics - cpi and ppi - had been placed together in a single, easy to use data set.

See the next post for your copy of the data set I constructed just in case you want to continue the analysis and discussion.

Some Recent BLS Trends Charts

Here are some recent trend charts and links that are worth some study.

1. BLS - Consumer Price Index - this is one of 5 charts from the BLS MLR Editor's Desk posted on Friday January 20th. These show up in the weekly BLS Update. The next two charts come that source as well. This uses the year over year percent change which produces some smoothing of the raw data.

I like the longer time period. I also like the fact that the BLS also provides a link to the data for this one factor that is moderately easy to use for further analysis and reporting for those who might be interested. In my experience, including the data is pretty rare with charts on the internet these days, so my hat is off to the folks at BLS for this nice feature.

I also like the fact that they used the unadjusted data. When doing the year over year calculation, the seasonal adjustment often just adds complication and possible confusion.

What do you see when you look at this graph? What recent trends stand out?

2. BLS Produce Price Index - Here is a second chart from the BLS MLR Editor's Desk for the past week. It has the same good features as the previous one - long time interval, year over year percentage change for smooth, not seasonally adjusted, and a link to the data in a moderately easy to use format.

What trends to you see at work? How does this chart complement the previous one for CPI?

3. Real average weekly earnings, December 2004 – December 2005 - here is a third chart from this week's BLS MLR Editor's desk. This one tells a pretty clear story, but it's not nearly as good as the previous two charts.

Some things I liked:

3.a. the use of a full year of data for each data point rather than focusing on change of the most recent month as is so often the case in reporting on these metrics.

3.b the inclusion of the data set (albeit only 5 data points)

Here are some things I find weaker on this chart than on the previous two charts:

3.c. The shorter time period only covering 2001-2005 rather than 1996-2005 - this would double the number of data points. For showing only yearly data, an even longer period and more data points might well be a useful thing to consider.

3.d the use of yearly data rather showing the 12 month change on a month by month basis as the other two charts do. If a longer period of 1996-2005 had been shown and monthly data used, we would have had 120 data points in the series rather than just the 5 that were used.

3.e the use of seasonally adjusted data rather then using year over year for smoothing. With monthly data showing year over year change, there is likely no need to invoke the complicating step of seasonally adjustment.

3.f the lack of mention on the chart itself that tells the viewer it is seasonally adjusted data. The information is in the text of the brief article at the link address, but could easily be overlooked.

BLS publishes their update every week. I find it worth taking a regular look. Looking at these three charts together gives some degree of multi-dimensionality but far less than I think is called for if we wish to understand CPI, PPI, or real average weekly earnings. Each of these could use a treatment that included the top 10 related factors - all shown on the same time scale.

Friday, January 20, 2006

There Must Be a Better Way: Targets to Aim At.

In the previous post, Employment Metrics: There Must be A Better Way we noted some of the weaknesses with the press and blog coverage of the BLS Employment Report for Dec 2005.

Here are some suggested steps we might consider taking to improve the coverage. I recognize that these are easy to say and likely hard to do. Over the next few weeks, we will take a cut at following these principles ourselves (practicing what we preach) to see where they lead us.

Steps towards a better way of reporting on Employment trends

1. Multiple Metrics. Select a substantial number (at least 10) of different measures of the employment situation and report in one place on all of them at the same time.

The BLS collects and archives literally hundreds of different time series so there is plenty from which to chose the best ones. There are also other potential sources of time series (other than the BLS) that might supply some missing piece of the puzzle. Figuring out which measures are likely to be the most important and most revealing is a crucial first step towards our target of greater clarity.

Multiple, complementary measures provide vital checks and balances on the interpretation.

2. Use the Same Time Scale for each Trend Graph. Once you have the 10 or more of what we feel are the most important metrics, it's essential to use the same time scale to show the trend for each. It will also be helpful to those who will see your creation to understand why you selected that particular interval for review.

Even better, since no single time scale will give the complete picture, make each of the 10 plus time series charts available in at least two different time scale windows - e.g. 2000-2005 and 1990-2005.

3. Smooth the data to reveal the underlying patterns. Much of the BLS employment data is erratic. To figure out what's going on and present it in a visual fashion that others can understand normally involves invoking some sort of smoothing.

There is no simple formula for the analyst on how to do this. My suggestion and preference here is that rather than using the Seasonally Adjusted BLS numbers, that we start our analysis with the Unadjusted raw trend data for each month in the series.

From this is it then possible to calculate the Year over Year Change and Year over Year Percentage Change.

Using one of these 12 month change viewpoints will often provide some useful smoothing all by itself.

If the trends are still erratic and hard to read, then use some moving average period (e.g. 3 months or 6 months) to achieve further smoothing. Some trial and error may be required before you get an understandable picture.

Regarding smoothing, my experience tells me that you will know it when you see it.

4. Use at least 2 significant digits. Some data like the month to month percentage change in unemployment rate has for what seem to be historical reasons been presented with only a single significant digit. If something is changing by 0.0% or 0.1% in a month, important patterns may easily be overlooked.

5. Avoid monotonically increasing charts such as the picture of total number of non-farm workers. Compute the year over year change in these counts instead.

6. Share your data set. In order to carry out the steps above, you will have effectively created a new data set that never existed previously.

It will have your 10 or more metrics that you have decided are most important to understanding the situation.

You will have the values of these factors for 2 or more time intervals.

You may have carried out some calculations on your original source data to make it more willing to reveal its secrets (e.g. calculating year over year or moving average values), thereby creating additional factors.

And from this data set you will have created graphs that you feel best represent the underlying processes at work.

While your format for the data set may differ radically, what you will have is an object that is logically equivalent to a simple two-dimensional table where each row represents one time periods and each column represents one of the factors you have selected or calculated.

It's likely taken you a fair amount of work to create this data set. You have used it for your own analysis and reporting. This step is vital, because by sharing the same data with others, they may be able to discover patterns and insights that add to the ones you have already provided.

7. Make the Data Set "READILY REUSABLE". As best as you can, share you data in a format that makes it easy for the next person to begin where you left off with the minimum of time and effort. Time is almost everyone's most precious and scarce resource. When you do this step well, you enable the conversation and collaboration about the meaning of the data to continue.

One of the approaches that works brilliantly for this principle is to put your simple two-dimensional data set into a text file structured as a Comma Separated Value (CSV) file. CSV files satisfy the "readily reusable" requirement. Many existing personal computer applications (e.g. Microsoft Excel) can open such a file and make it ready for further analysis and charting.

In the examples that follow in the next few weeks, we will be aiming at applying as many of these principles as we can so you can see how it all works in practice.

Thursday, January 19, 2006

Employment Metrics: There Must Be A Better Way.

In the previous post, we listed 51 employment related metrics that we had unearthed by briefly digging into a short list of press and blog coverage of the most recent Bureau of Labor Statistics Employment Report (for December 2005).


A. Amazingly, many factors are offered and used in the logical arguments of the story or blog entry without providing any data at all to back up whatever claims are made

B. Some authors relied on emotional language instead of numeric quantification to make their points

C. Only a small percentage of the commentators that I have read used any graphs at all. The graphs that were used covered widely different time periods, 3 years, 7 years, 11 years, 65 years with no explanation of why a particular interval was chosen.

D. A large percentage of the factors that came with some associated data looked only at the single data point showing the value for the most recent month. E.g. the number of jobs of particular type added in December 2005.

E. Some factors came with two data points - the values for the two most recent months

F. One case used a single data point that was the average of the two most recent months

G. Several cases gave average values for the full years 2004 and 2005.

H. Some factors indicated whether they represented seasonally adjusted values or not. Many other factors were offered with any such indication.

I. Some factors were raw counts, others involved year over year differences in the counts, still others showed year over year percentage change or month over month percentage change, or month over month change in the counts, and with or without the moving average.

J. Few commentaries gave you the data itself.

K. Many of the commentaries seemed to be in a terrific hurry to publish within a short time after the BLS monthly release on Friday, January 6th. We are now almost two weeks out and it will be another two weeks till the next release. All the BLS data showing the trends for the past 65 years is already posted and waiting our actions aimed at understanding the most recent month in light of what has happened over the years. The plan of this blog is to try to use that time wisely and see if we can bring some further clarity to what's going on.

How can we make sense of all this?

Conclusion: There must be a better way.

In the next post, we will entertain a few suggestions that may help lead us out of this inhospitable wilderness.

Employment Metrics in the News: What factors to select?

To understand the most recent Bureau of Labor Statistics (BLS) Employment Report covering December 2005 , it’s useful to consider which metrics show up in the post publication coverage.

What factors do those most knowledgeable select to make their case? How do they use them? What comparisons do they make or suggest? What time periods?

Of course we find the headline numbers like unemployment percentage appearing in most articles. What you may find somewhat surprising if you sample the coverage (e.g. by using the list compiled by Brad Delong), is how each commentator selects their own favorite factors to tell their story and how different these turn out to be from each other.

Collectively, combining all metrics gives a breadth of coverage that seems to go well beyond any of the individual articles. You will also see a hodge-podge that may make you wonder whether there might not be a better way. We will have more to say about this in future posts. How do the factors listed here compare with the ones used in the coverage that you may have read.

M01 Monthly non farm payroll job growth for the previous month, seasonally adjusted in thousands

M02 The unemployment rate (percentage) for the previous month, seasonally adjusted with two significant digits precision. Also, graphs showing the unemployment rate for the past 3 years, 7 years, and for other time periods

M03 The Employment Population Ratio since 1948 (graph)

M04 The seasonally adjusted percentage of unemployed plus marginally attached plus discouraged works since 1995 (graph).

M05 The seasonally adjusted percentage of those unemployed for 15 weeks or longer since 1995 (graph)

M06 Seasonally adjusted Labor Force Participation Rate

M07 Hours worked per week

M08 Dollars per hour

M09 Dollars per week

M10 Number of jobs created in previous month in Manufacturing

M11 Number of jobs created in previous month in Construction

M12 Percentage marginally attached

M13 Percentage part time for economic reasons

M14 Average unemployment percentage for the full year 2005

M15 Average unemployment percentage for the full year 2004

M16 New unemployment claims for previous month

M17 Lowest number of new unemployment claims in the past 5 years

M18 Number of jobs created in previous month in Retail

M19 Productivity

M20 Number of discouraged workers

M21 Household Survey total jobs created for the month

M22 Payroll survey total number of jobs created for the full year 2005

M23 Household survey total number of jobs created for the full year 2005

M24 Number of jobs created in previous month in Food Services

M25 Number of jobs created in previous month in Professional Services

M26 Number of jobs created in previous month in Business Services

M27 Number of jobs created in previous month in Health Care

M28 Job outsourcing

M29 Percentage of jobs created for the month that were in the Services sector

M30 Percentage of all current jobs that are in the Services sector

M31 Number of jobs created in past year in Health and Education

M32 Number of jobs created in past year in Leisure and Hospitality

M33 Number of jobs created in past year in Trade and Transport

M34 Number of jobs created in past year Finance

M35 Number of jobs created in past year in Local Teaching

M36 The number of people who have dropped out of the workforce

M37 Percentage of “McJobs”

M38 Percentage of “good jobs”

M39 Percentage of full time jobs

M40 Aggregate income growth for all employees

M41 The BLS U-6 unemployment rate

M42 The BLS U-3 unemployment rate

M43 Long term discouraged workers

M44 Number of people with at least one job (household survey)

M45 Total number of payroll jobs created in the month as a result of the "birth/death" rate

M46 Percentage of total payroll jobs created during the month that resulted from "birth/death" calculation.

M47 Gross domestic income (GDI)

M48 Tax revenue from employment

M49 Help wanted advertising index (print + internet)

M50 Monster employment index

M51 Conference Board Help Wanted Index

What other factors did you see?

Which do you think are most important?

What important ones are missing from this list?

What time frame(s) do you like most?

BLS Employment Situation Report

Here are the two charts that were published with this month's BLS Employment Situation Report for December 2005. This was one of the references given by Brad DeLong in his survey of the differing reports on these numbers but he did not include these charts in his chart examples.

From literally hundreds of possibilities, the BLS selects these two factors to visualize: chart 1) the headline unemployment rate (seasonally adjusted) and chart 2) the total number of non-farm jobs also seasonally adjusted.

Comments on Chart 1: The three year view gives more perspective than just mentioning the current value as seems to be the case in so many articles and blog entries reporting on the release from BLS of these numbers.

For fuller understanding of the unemployment rate metric, my recommendation is that would be best to look at other time intervals such as 1 year, 5 years, 10 years and 20 years. Alternatively, you could look at periods beginning 1980, 1990, and 2000.

When you do that, you will likely be able to notice that there is more nuance than can be gleaned form the 3 year view alone.

Comments on Chart 2: Charts with mostly monotonically increasing data such as the metric of total jobs shown in chart 2 are almost always difficult to read. They provide little useful new insight or understanding. They say "things" are going up but don't tell you how fast, and don't tell whether the rate of increase is changing or staying the same.

The chart shown in the previous post from the BLS Editor's Desk was based on the same source data of the total number of jobs, but computing the new measure of total jobs created in the past year proved far preferable.

The rest of the BLS Employment Situation Report is dense with trend information delivered as text messages or complex tables. Because of formatting limitations of using a medium designed around 8 by 11 paper, the tables published in this print version are also seriously incomplete. The BLS does indeed have an approach to measure and report on many vital measures of employment, but the report itself just cannot be useful for anyone who wants to understand these trends without investing huge amounts of personal time.

In my opinion, this kind of approach falls far short on the key human engineering metric of readily reusability.

A major goal of this blog is to figure out a way to unlock the valuable data collected by sources such as the BLS and make it available to both expert economists AND ordinary citizens in a format they can understand and with a time-demand-footprint that is in keeping with the idea that Time is our Scarcest Resource.

The BLS is already doing things that take us part way towards this idealized goal. We'll be discussing this in more detail later as well as looking for ways to further increase usability of this vital data.

Friday, January 13, 2006

Payroll employment up by 2 million in 2005, MLR: The Editor's Desk

Here's the some more news and one more chart about U.S. employment from the BLS from about 10 days ago. The Editor's Desk at BLS puts out one new chart each weekday.

This entry and the accompanying chart show the seasonally adjusted annual change in non-farm employment for the past 7 years from 1999 to 2005. This is a longer time period than normally used in these published BLS Editor Desk reports. I would have liked this better if it had showed the year over year behavior every month over the same period (possibly with some moving average to smooth the data a bit). Since it showing a whole year's total results, I would also have preferred to see not seasonally adjusted data used.

In our previous posts this week, it's clear that there is a lot more to understanding employment than a single headline number chart -even one with a memorable total number like 2 million. Even though the headline number gets a lot of play, the chart even for a single metric surely adds some further perspective when it covers a period of this length.

The articles also discusses yearly gains in specific industries such as construction, finance, and mining but offers no charts for these.

Hat Tip to The Big Picture

One of my favorite sources that points me to interesting charts these days is Barry Ritholtz's blog, The Big Picture.

In a couple of recent posts, I got my initial heads up about interesting time series charts and related articles from Barry's site but neglected to thank him and link back to him for the leads. These included the post on Dealing with Aggregate Data that showed the Dow for the last five years along with the behavior of the individual stocks included in the Dow, and the post Normalizing Headline Numbers that showed the Standard and Poor Index expressed in ounces of gold.

Thank you Barry.

You can follow these links to see his posts on the Dow and on the S&P. Scroll down through his blog on any given day and you will invariably find some excellent and interesting charts and discussion for your consideration.

For example, in recent days, he has had some good finds with employment charts from Northern Trust Economic Research that you can view at: Employment Recovery Continues to be Sub-par. These include the one shown below

Shadow Government Statistics.

Here's an alternative view of the consumer price index (in blue) based on calculations using the same methodology that was used for this metric back in the 1970s for CPI. The results are dramatically different as you can see.

Source: John William's Shadow Government Statistics.

What if the key factors we consider when evaluating how our world is going are biased? The answer is easy: the charts we look at will also be biased no matter how perfect we make them or how many different views we examine.

With this in mind, check out John William's site Shadow Government Statistics where he tackles the question of the accuracy of some of the key headline numbers (GDP, CPI, Unemployment, Deficit) that impact so many things in our economy and our lives.

John raises some tough questions and puts us on warning that we always need some good checks and balances to any metrics we use in our analyses. He says:

Have you ever wondered why the CPI, GDP and employment numbers run counter to
your personal and business experiences? The problem lies in biased and
often-manipulated government reporting. We offer an exposé of the problems
within the reporting system, and an assessment of underlying economic

John offers a series of free reports that go into the details (see links below). These are controversial, to say the least.

08/24/04 Series Master Introduction
08/24/04 Employment and Unemployment Reporting
09/07/04 Federal Deficit Reality
09/22/04 The Consumer Price Index
10/06/04 Gross Domestic Product

Thursday, January 12, 2006

Formatting for Previous Entry and Window Size

My apologies if you ran into formatting difficulties with the previous post. You may need to shrink your window so that there is only one graph per row to make the text line up appropriately with the picture.

I clearly need to find a better way to publish a series of graphs all in one blog entry. I'll be working on this and sharing what I find in future posts.

Saving Viewer Time with Multiple Charts

Net New Jobs in the Private Sector - three month moving average - 1994-2005

Long Term %

The Want Work Percentage. This number includes those who want a job but who are not classified as "unemployed" by the BLS. It also includes those working part time who want full-time employment.

Thirty five years of the unemployment percentage.
Comparing Seasonally Adjusted numbers to raw numbers for the unemployment percentage.

The Employment Population Ratio

The last three years of the unemployment rate

This is a continuation of the previous two posts.

The earliest post, How A Journalist Should Cover The Economy ... made a series of six graphs available through 6 separate links. This coverage gave a lot more perspective to the employment situation than many writers on the subject who only discussed the trends at work with words - a poor substitute in the world of trends.

The previous post, The Scarcest Resource: Our Time helped you to navigate to the middle of a single web page where a series of 7 graphs were physically near each other and viewable by paging up and down or scrolling rather than by linking.

In this post, we continue our experiment by placing these seven into a single post - giving each one a very brief commentary.

Please let us know which method works best for you.

Please compare the ease of use and time required to get the full picture from this approach.

What obvious deficiency jumps right out when you see these all so close to each other? Hint: what would Tufte say?

Wednesday, January 11, 2006

The Scarcest Resource: Our Time

In the previous post, we complimented Brad DeLong for pulling together a variety of verbal viewpoints and graphical viewpoints to form a fuller picture of the meaning of the most recent Bureau of Labor Statistics (BLS) report on employment.

Having six pictures of different view of the employment situation definitely adds to understanding.

One of the things that often interferes with our ability to understand a complex mix of information is TIME - the time we have to look at what someone is presenting. In this case, even though Brad did a lot of work for us in advance, for us to actually see the trend pictures that he has assembled requires many mouse clicks or key strokes and a lot of our precious time. I would bet that there will be many people who get to Brad's blog entry, find it interesting, but never follow the links. What a shame.

For those who do, my guess is that they will find the experience disjointed. There is an interruption between each graph viewing that disrupts the processes at work within our heads. If there are any network delays as we navigate from one web page to another, that would make it even worse and more of a jumble.

In this post, I am going ask you to join me in an experiment. I recognize that your time is precious and I appreciate any time you chose to spend checking this out.

I would like to know whether being able to scroll down through all the graphs without having to jump from web page to web page makes it easier or harder for you to understand Brad's selected charts.

So rather than following the links from the previous post, please follow the steps below to jump into Brad's BLOG where a series of employment related graphs has been posted to multiple blog entries that are physically near each other on the page.

Let me know if you think the scrolling approach makes cutting through data easier.

First step) In Brad DeLong's Journal archive for January 2006 , please scroll down or SEARCH till you find the entry titled: "Unemployment: The Importance of "Seasonal Adjustment" dated on January 8th at 1:49 PM.

Step two) Starting at that point, scroll down, and one by one check out the series of graphs that appear in the series of posts stretching backwards in time.

You will see the following graphs, some with nearby commentaries.

1) Unemployment: The Importance of "Seasonal Adjustment" - the graph with this entry shows both the trend for the seasonally adjusted unemployment percentage (blue line), and for the more erratic red line showing the unadjusted unemployment percentage month by month. The period covered is 2000 to 2006. The seasonally adjusted rate is notably smoother.

2) Thirty Years of the Unemployment Rate - This next chart shows the unemployment percentage for a period from 1970 to 2006. It is not stated, but this and the charts that follow are likely seasonally adjusted charts.

3) Scrolling past a few other posts, you come to: Three Years of the Unemployment Rate - which shows the most recent history for the period from the beginning of 2003 through the end of 2005. The rate shown is seasonally adjusted.

4) Employment-to-Population Ratio - this chart shows the period from 1948 to the present. This is the percentage of the adult working age population that were employed during the month.

5) Unemployment and Underemployment - This next post shows what I believe to be a particularly important metric that is normally ignored or overlooked when evaluating the BLS' monthly employment reports. It doesn't have a catchy name at this time and the explanation of how it is calculated leaves most people breathless and rolling their eyes.

For now, I will call this the WANT WORK PERCENTAGE. This is the percentage of people of working age who fit one of the following three categories.

a) classified as unemployed by the BLS (people who have looked for work in the last 4 weeks)

b) want a job but are not considered unemployed by the BLS (the so called "marginally attached")

c) people who are working part time but not through their own choice - they would prefer to be working full time.

All these people WANT WORK - either a job or more hours to make their job full time.

The period for this chart is from 1995 through the end of 2005 or 11 years.

6) Long-Term Unemployed - the percentage of the labor force that has been unemployed for 15 weeks or longer. The period of this chart is also 1995-the end of 205.

7) Payroll Survey Employment Growth since 1994 - This shows the month to month net gain in payroll jobs. The period goes back to January 1994 through the end of 2005 or 12 years.

Was this easier than linking?

Was this better for you to scroll rather than link back and forth?

Was this faster?

What else did you learn?

What could have made your viewing even more pleasant?

What might have saved even more time?

In the next post, I will propose a third approach to these charts that I think you will find even easier and better.

How a Journalist Should Cover the Economy...

Check out Brad DeLong's January 11th post about his upcoming course - "How a Journalist Should Cover the Economy..." and follow his link to the readings. Here you will find a road map that gets you to a dozen different views about what the most recent Bureau of Labor Statistics (BLS) employment report means.

Of special note are the 6 pointers (duplicated below) to a set of trend graphs that add depth beyond the headline unemployment percentage and job total numbers.
Payroll Survey Employment Growth since 1994
Long-Term Unemployment Unemployment and Underemployment
The Employment-to-Population Ratio
Thirty Years of the Unemployment Rate
Three Years of the Unemployment Rate
Unemployment: The Importance of Seasonal Adjustment

If you want to understand what the latest numbers mean, and the direction we are heading, and how that compares to the past, Brad's quick tour will add a lot to your understanding.

The many different readings are also perspective widening. I liked the Tim Duys article the best. I thought it was the most balanced, dug the deepest, and included the best trend information in graphic form.

It was remarkable to note how many of the commentators provided their thoughts with nary a graph. One of these with zero charts was the Tim Kane article that to my mind was also the most slanted.

I'll have some more to say on the employment situation and how one might best comment on it in the next post.

Tuesday, January 10, 2006

Normalizing Headline Numbers

www.chartoftheday.com offers a free weekly chart. Their offering for December 30th, 2005 is a particularly nice example of the concept of using normalization to reveal otherwise hidden details. In this case, reproduced here, they have taken the Headline Standard & Poor index and divided it by the price of an ounce of gold.

The picture is a lot different than if you look at the S & P behavior by itself.

Other possible normalizations that might reveal more of what is going on include dividing the S & P by the price of a barrel of oil, or by the number of dollars it takes to purcahse one euro. Similar graphs can be drawn for the DOW and the NASDAQ.

Sea Ice Decline Intensifies

This is a little late for posting, but the referenced article (Sea Ice Decline Intensifies) from NSDIC (the National Snow and Ice Data Center) is well worth checking out for their excellent use of trend graphs (two of which are reproduced here) to make their point.

They have taken some complex map data that I find somewhat difficult to read, and transformed it into simple time series graphs that pack a wallop and that just about anyone can underestand.

Dealing with Aggregate Data

In the recent New York Times article,
Dow Tops 11,000; First Time Since '01 - New York Times, they show the progress of the DOW over the past 5 years while superimposing the behavior of its component parts.

It's a nice example, of why it is some important to look beneath the covers of Headline Indicators like the Dow and disaggregate its behavior into its component parts.

It would be nice to have an easy way to change the time frame or to select just the 3 or 4 top stocks for the period, or the 3 or 4 worst performing stocks.

Thursday, January 5, 2006

Housing Affordability

Twenty Years Later, Buying a House Is Less of a Bite - New York Times - Dec 29th, 2005 This NY Times article attracted a lot of attention in the last week by talking about trends in housing affordability.

See for example these posts by Elizabeth Warren and Brad DeLong. The authors of the NY Times article, David Leonhardt and Motoko Rich, kindly supply some interactive graphics and tables as well as a detailed Excel spread sheet of data from 1979 to the present, covering literally hundreds of cities, metro areas, and rural areas.

This is a good thing since their article while it is long on examples, is short on actually showing the pictures that make the trends. The graphs they do make available prove dfficult to see what is going on. Here for example is their graph showing the affordability pattern for the US as whole for the entire period.

The scale goes to 100% and makes it difficult to see what's going on. The interactive graphics allow you to see graphs for other cities or areas, but these are also scaled to 100% severely limiting understanding.

Contrast the original graphic to the one below scaled with a Y axis from 10 to 25. The patterns are a lot easier to read off the graph.

My reading is that using the metric of affordability suggested by the article (percentage of median income required for the mortgage on the median priced home) it is pretty clear that for the US as a whole, housing is becoming less affordable which is not the impression you will get when you read the article.

What do you think?

Now look at the the same graph from 1996 to the present time. It appears to me that using this metric, housing is getting less and less affordable.

Bottom line: if what you want to understand are the trends that matter most in our lives, there is no substitute for atually providing easy to read graphs that show the key indicators. Talking about trends in text is simply not even a close contender for explanatory power.

Footnote: I believe the metric they use for affordability actually distorts the affordability story, but that is a topic for another post.