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Econ Videos 79 videos

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Econ: What is Seasonally Adjusted Data? 0 Views


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What is Seasonally Adjusted Data? Seasonally Adjusted Data is a factor within the Consumer Price Index that takes into account how price change data can be skewed due to Holiday season shopping for retail or summer vacation prices for travel and transportation. The seasonal adjustment attempts to take a broader perspective over a longer period of time to even out seasonal price spikes and dips.

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Transcript

00:00

And finance Allah Shmoop What is seasonally adjusted data or

00:06

S a D or sad Dr Elek Troy did That

00:12

guy builds a new weather control advice as part of

00:15

his evil plan for world domination He dumps fifty inches

00:18

of snow on Phoenix We're not sure how world domination

00:21

follows from a big snowstorm in Phoenix but well you

00:25

know we're sure Dr Elek Troy knows what he's doing

00:27

Dumping snow in the desert Well one kind of seasonal

00:30

adjustment Not really the one we're talking about here but

00:33

we'll get to that in a sec Captain Condor this

00:35

guy flies from his secret layer the superhero lair high

00:40

up in the Sierra Nevada mountains He captures Doctor Elec

00:43

Troy destroys the weather device and saves the day Cut

00:46

to you You're a researcher for the National Weather Service

00:50

You're locked in a basement of the Washington D C

00:52

Headquarters with no windows and no other people here surrounded

00:55

only by the blinking lights of whether measurement equipment You

00:59

don't have any cell phone reception or Internet access for

01:02

you All you know is that your equipment shows fifty

01:05

inches of snow in Phoenix You call your boss the

01:07

Phoenix is the snowiest place in the nation called the

01:10

press Get started on your game Changing academic paper on

01:14

climate change Well wait a minute The fifty inches of

01:17

snow doesn't indicate a really change in Phoenix is long

01:21

term snowfall It's just a one time event in this

01:23

case caused by a super villain you know as sometimes

01:26

happens art lesson here you can't always trust raw data

01:30

Numbers need contacts right The need for context leads us

01:35

to relying on seasonally adjusted numbers So yeah sometimes raw

01:39

data uncooked data It's very unhealthy to eat can be

01:43

misleading To counteract this fact while some economic information gets

01:46

reported on a seasonally adjusted basis that is the numbers

01:50

get massaged to take into account the natural impact of

01:53

the time of year For instance the unemployment rate well

01:56

This stat gets reported on a seasonally adjusted basis Every

02:00

year going into Christmas companies hire additional seasonal workers Package

02:04

delivery People need extra drivers Amazon and other retailers need

02:09

extra people to process orders Malls need elves to put

02:12

crying kids onto the lapse of Santa's suicide Hotlines need

02:16

extra people to take distress calls from you know family

02:19

dinners on an unadjusted basis the unemployment rate would always

02:23

decline Headed into the holiday season all these extra workers

02:26

would lead to lower unemployment data every year But eventually

02:30

Christmas comes and Christmas goes Everyone opens their presence and

02:34

while stuffs everything into closets for potential re gifting next

02:38

year Yeah Bob we're looking at you All the extra

02:40

holiday workers are back on unemployment at least until spring

02:43

when they can start lining up for summer gigs Yeah

02:46

another season like maybe they get jobs as lifeguards or

02:49

stand up comedians on cruise ships So going into the

02:53

holidays every year would see a drop in unemployment with

02:55

unjust ID data And then after the holidays there would

02:58

always be a rise in the unemployment rate Well if

03:01

the figure was reported this way it would be hard

03:04

to read much of the movement during this time of

03:06

year would be a result of seasonal factors The unadjusted

03:09

statistics wouldn't mean muchas well any kind of economic indicator

03:14

It would be hard to see what's really going on

03:16

in the actual economy from these numbers Aside from the

03:18

usual ticks up and down well is this year better

03:20

than last year How does this year's stack up historically

03:23

How's the labor market really doing Yeah it'd be hard

03:26

to tell Much of the data would represent seasonal noise

03:29

So the economist strip out the seasonal movements They make

03:32

guesses based on what's happened before About what the data

03:35

should do is a result of these seasonal factors They

03:38

then take the seasonal moves out and only report the

03:41

changes that don't have to do with seasonal workers Instead

03:45

the numbers tracked the underlying health of the labor market

03:47

like they're supposed to Well of course if you spend

03:50

your winters as a mall Santa you're springs dressed like

03:54

the Easter Bunny your summers as a snow cone sales

03:57

person and you're autumns as a Jack o lantern carver

04:00

wealth And you might never get counted in any seasonally 00:04:03.72 --> [endTime] adjusted numbers so you know good for you

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