Economic and Business Forecasting: Analyzing and Interpreting Econometric Results

CHAPTER 2

First, Understand the Data

Large amounts of data can be cumbersome and daunting, frustrating users and turning them away from rich information that can provide insight into the world. During, as well as long after the Great Recession of 2007 to 2009, anecdotes abounded about the weakness of the labor market: laid-off workers finding a new job only to be laid off again weeks later; job seekers unable to obtain employment for years; and workers taking pay cuts to help companies as they struggled to survive. How representative were these stories? Were they a few people's experience, or did they indicate broader labor market troubles? Moreover, who were these laid-off workers unable to find jobs for more than a year? Were they the least educated in our society, the oldest, or a member of a minority? How long was the average person out of work? How many people continued to look for work and how many just gave up? Were the employed immune from the downturn, or were they seeing their wages crumble in the weak economy? Were the employed working harder for fear of losing their job? All these questions can be answered, if an analyst dives into the wealth of economic information available on the economy and knows the techniques to filter though the noise of any data series. This chapter presents a review of the major economic indicators used in both public and private sectors. For the serious analyst, understanding the data is essential before attempting to apply any sophisticated ...