Tis the seasonal adjustment

Hawaii unemployment rose from 2.9% in November to 3.2% in December, the first time in years the rate has topped 3%. But unemployment actually fell. How can unemployment fall and yet rise? Easily. It fell in reality. It rose in the seasonally adjusted numbers that the Labor Department uses. So I thought I would explain that in this post. Economists try to track uptrends and downtrends in the employment picture, but know that some changes are not trends at all. They're just seasonal fluctuations. Retailers hire extra help for the Christmas holidays. Other employers take on summer help to cover the vacations of their regular workers. Unemployment goes down from November to December every year as stores recruit part-timers to help rake in the sales on their busiest month. We could use nothing but real numbers, and simply explain every year that December's increase is an annual phenomenon rather than a permanent uptrend.  Instead, the Labor Department made up formulas to account for seasonal fluctuations, to dial them out. What's left, in a perfect world, is the actual longer term trend. We don't live in a perfect world. The seasonal adjustment is never totally right. So instead of giving the number and then explaining the seasonal factor, we give the seasonally adjusted number and they try to explain what factors made the seasonal adjustment too great or too small. From my point of view as an explainer, the inventors of the seasonal adjustment have cleverly concocted a way to make the number even more erroneous, requiring an even more complicated explanation, than if they had left the numbers alone in the first place. What happened in December is that there was less seasonal hiring that the seasonal adjustment tries to compensate for. So it overcompensated. The unadjusted unemployment rate was 3% in November and fell to 2.8% in December. Two islands saw actual increases -- Kauai and Lanai -- ironically both rose to 3.2%, the same number as the seasonally adjusted statewide jobless rate. But the Big Island fell one tenth to 3.6%, Molokai fell six tenths to 6.2%, the island of Maui fell one tenth to 3.3%, and Oahu, home to three quarters of the state population, fell two tenths to 2.5%. Hawaii economists uniformly predict higher joblessness this year. But it hasn't actually begun in any major way yet.