I recently wrote a post on Medium that goes through reasons the unemployment rate, as conventionally measured and reported, is underestimated. The challenges that brought this about are well known to the BLS, as well as a bunch of knowledgeable analysts. To their credit, these folks have written about it; the documentation produced by the BLS is really good. Still, the knowledge mostly resides with a small number of people who follow economic statistics closely. Most people have little time to look deeply into these issues, so they just take the number that the BLS emphasizes in its monthly employment situation.
For a host of reasons, the pandemic has increased uncertainty in these numbers. If you follow economic numbers closely, you get it. But the vast majority of people probably don’t. Example: for most of the public, the unemployment rate in April was 14.7 percent. But if you’re among those in the know, you understand that the rate could be as high as 19.5 percent or as low as 14.7 percent. That’s just based on how the BLS counts people with ambiguous answers to a question about why they weren’t at work.
It’s clear the data agencies are working hard on issues raised by the pandemic, and working on technical fixes. In the meantime, it would be great to see something more on the communication end. It would be good to see a more widespread, explicit acknowledgement of the rising uncertainty in economic data releases by official agencies. Imagine, in the case of the unemployment rate, substituting a range for the single number that’s first reported in the Employment Situation. It’s not likely to happen, but it’s worth a mention.
All economic statistics have uncertainty bands around them. Uncertainty caused by the pandemic is at least an order of magnitude greater than what we’ve seen in the past. Some sampling frames are essentially unpopulated now (think small businesses). I think agencies need to be clearer and more plain about this when they report their numbers.
You can see the post here.
https://medium.com/@monacorm/unemployment-is-high-but-its-worse-than-you-think-b5014dc2b8fb
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