Data Day

In which I update some old posts with new numbers and thoughts.

The Unemployment Line

This was my first real post, and I sorta cheated by thinking about (and modeling it offline) for a few months before starting the blog.  The central argument was that if you modeled the unemployment rate from it's peak (Oct '09) until the present (at the time, Nov '12) you created a remarkably linear fit.  At the time of the blog post, I could add four more months of data which not only fell along the line, but improved the fit.  Since that post, two more numbers have come out, and at first glance the model missed twice.

The April number was modeled to be 7.6, but actually came out better (7.5).  The May number was modeled to be 7.5, but actually came out worse (7.6).  The political pundits jumped on both numbers to show that their favorite program was working, or the opponent's obstructionism was hurting the economy.  Smarter pundits pointed to the number of jobs created or U6 unemployment number changing in the opposite direction to make counterpoint cases.  What I pulled from these numbers was that the "linear model" is now even better than before.  Adding in these data bring the R-squared up past 0.965, meaning the fit is better.

The added data (dark red) still follow our linear trend.  The change in U3 (light red) is still right around -0.6% per month, even in the months that have less than 12-month averaging (open squares).  And the predictions I made earlier are still legitimate.  (Well, as legitimate as they were ever going to be.)  The rounding to one decimal means that all the focus on one data point is silly.  That said, do not be surprised if the June number is 7.5.

Sell in May and Go Away?

Not too much data to add to this one.  The S&P started May at 1597 and ended it at 1631 (giving a yield of 2.1%).  This is larger than an average month, and didn't make those Sell in May proponents happy.  They are now (jokingly?) advocating "Sell in June".

Anyways, sorry for such a short post.  Next week we will get back to the interactive models.