Prior to the pandemic, a lot of unemployment profit claims were adjusted using multiplicative models. However, as of March 2020, BLS staff modified the seasonal adjustment models to additive because the pandemic had a serious impact on the UI series. As the impact of the pandemic diminished, the seasonal adjustment models were modified back to multiplicative models.
During the pandemic, the UI series can be treated as a hybrid adjustment, with additive adjustments applied to essentially the most volatile period, i.e. from March 2020 to June 2021, and multiplicative adjustments applied before and after this era. Published seasonal aspects can be presented as multiplicative, with additive aspects converted to latent multiplicative aspects, and won’t be subject to revision.
To provide a more accurate picture of the degrees and patterns of claims for each initial and continuing claims, the sets of outliers within the seasonal adjustment models were modified for each claims series. As a result, there have been larger-than-usual revisions for a lot of weeks over the past five years. However, these changes should provide a more accurate understanding of harm levels and patterns
For some time, the market positively perceived the bad economic news, which lowered the prospects for further Fed rate hikes. However, as the tip of the Fed’s rate hike cycle seems imminent, investors see bad news as just bad news again. It stays to be seen what impact, if any, this latest economic data may have on tomorrow’s March jobs report
What to search for in tomorrow’s job report
An unemployment rate below 200,000 would likely be seen nearly as good news for the economy, suggesting the Fed may hold off on rate of interest hikes for the foreseeable future. However, it ought to be noted that one other vital aspect to contemplate is wage growth. Higher-than-expected wage increases may reinforce the idea that the labor market may turn out to be a source of inflation as firms could also be forced to boost prices to maintain up with rising labor costs.
