Canada’s unemployment rate will likely double to 10%, and that’s an understatement

Normally, I don’t venture into to predicting month-to-month changes in the unemployment rate, but this month is an exception for two reasons. The changes are certainly going to go well beyond the statistical noise inherent in the Statistics Canada survey, so there is no chance that the picture will be clouded. And history really isn’t a guide to what is coming next (in the very short term), so sophisticated models based on past data don’t have a particular advantage. My bets are on an almost doubling of the Canadian unemployment rate between February and March, with even this being an understatement because the official survey preceded some of the more dramatic shutdowns that happened later in the month. I’m suggesting that we are even probably close to 15% right now.

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What you need to know about Statistics Canada’s survey of the labour market

On Thursday, April 9th Statistics Canada will release the results of the Labour Force Survey for the month of March 2020. COVID19 makes this one of the most scrutinized releases in the 75 year history of the survey, reporting as it will on jobs and unemployment during the week of March 15th to March 21st. Here’s what you need to know, and what to look for.

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I’ve been blogging for five years, and here are my 10 favourite posts

With the New Year approaching, permit me the opportunity to wish you and yours peace and prosperity.

The end of 2016 marks the fifth year of my blog, and I’m grateful to my students and readers for making it worthwhile, and particularly to those who have taken the time to reblog, comment on, or otherwise share one of my 148 posts.

Rather than offer you the usual top ten most popular posts, here are links to my favourite posts written at some point since I started blogging in November 2011. They are not necessarily the most viewed, but I like them because they best illustrate the principles motivating my writing:

  1. Write about what you know, and give readers the opportunity and resources to learn more.
  2. Focus on what is relevant—what people want to read, and what contributes to a constructive conversation about public policy.
  3. Do this in a professional way that uses the principles of economics.

Here are links to my ten favourite posts of the last five years.

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The US unemployment is lower than the Canadian, but not by as much as the official statistics suggest

The unemployment rate in the United States fell to 5.3% in June, while the Canadian rate as of May stands at 6.8%. When Statistics Canada releases the June numbers on July 10th they are unlikely to show much improvement.

But when comparing the two countries it is important to remember that there are subtle differences in statistical methods that tend to push the  Canadian statistic higher than the American. The unemployment rate in Canada would be 6.1% if it were calculated using US methods, rather than 6.8%

The gap between the two may be significant and it may grow even larger, but it is not as big as the official statistics suggest. See this 2012 post for an explanation.

Mr. Keynes and the Austrians: a battle over a suggested interpretation of unemployment

Arthur Cecil Pigou made lasting contributions to the science of economics, but for macro-economists of a certain generation he will always be considered a laughingstock.

Arthur C Pigou

Professor Pigou taught at Cambridge University during the first decades of the 1900s, and had the misfortune of making a cameo appearance in the opening chapters of what is arguably the most influential economics book of the 20th century, The General Theory of Employment, Interest, and Money, written with eloquence, and at times a very caustic pen, by his colleague at the same university, John Maynard Keynes (whose last name, by the way, sounds like “Canes”).

Pigou’s big mistake was to suggest that the unemployed themselves were to be blamed for their predicament. To Mr. Keynes, the notion that the persistently high unemployment rates of the Great Depression were in some sense voluntary was worthy of scorn and ridicule.

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Three predictions for the January job numbers

corak-jobs

On Friday Statistics Canada will release its estimates of the January job numbers, and after about 20 minutes of statistical modelling, using fuzzy data, over a small glass of red wine, I am prepared to make three predictions, albeit with different degrees of confidence.

First, I am most confident suggesting that January’s job growth will be less than the 40,000 recorded in December; second, I am confident that it will be less than 21,000, which is the average monthly change during the recent past; and third, if I had to offer a single number, I’d say the economy added only about 1,700 jobs in January.

All three ingredients—the statistics, the fuzzy data, and the red wine—were important in making my forecast, but realizing the data are fuzzy was crucial.

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