As pattern-seeking creatures, statistics have a peculiar hold on our minds. Quite a large number of decisions are undertaken on the basis of what statistics tell us. That is certainly true when it comes to government economic data and the blizzard of stats that come out every month; billions of dollars worth of value appears or vanishes on the basis of what these numbers say about the health, growth and direction of the economy, and the implications for company profits, interest rates and so on. (Can butter production help you predict the market's next move? Find out here. Read World's Wackiest Stock Indicators.)
Unfortunately, some of that faith seems to be misplaced. While great reliance is placed on government economic numbers and the financial media reports on them at length, in-depth discussions of how the numbers are created - and where the weaknesses may lie - is relatively rare. Unfortunately, those gaps are significant.
Unemployment
There are two different surveys that examine employment - the household survey and the payroll survey. While many seem to think that the larger sample size of the payroll survey makes it more accurate and reliable, from a statistical standpoint the household survey's design is more sound and the margin of error is usually better.
To read the full piece, please click the link:
http://financialedge.investopedia.com/financial-edge/0411/5-Government-Statistics-You-Cant-Trust.aspx
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