Many of us take numbers like Unemployment as Gods Truth.
First the last paragraphs of a CNN piece on Unemployment numbers
https://edition.cnn.com/2025/08/01/business/trump-job-report-number-fire
For example, the BLS posted a notice in June stating it stopped collecting data for its Consumer Price Index in three cities (Lincoln, Nebraska; Buffalo, New York; and Provo, Utah) and increased āimputationsā for certain items (a statistical technique that, when boiled down to very rough terms, essentially means more educated guesses).
That worried Federal Reserve Chair Jerome Powell. In testimony before Congress in June, Powell said he believed the BLS data to be accurate, but he was upset about what could become a trend.
āI wouldnāt say that Iām concerned about the data today, although there has been a very mild degradation of the scope of the surveys,ā Powell said at the time, in response to a question about survey data quality. āBut I would say the direction of travel is something Iām concerned about.ā
How many actually know that these numbers are model generated. At BLS (US Bureau of Labor Statistics) they use a version of the Birth and Death model. This is a model initially built to model Population Dynamics and other related Biological Processes (i). It is also used in Finance to Build Credit Curves which are used to Price Credit Default Swaps (CDS)
As I have worked a little bit on Credit Curves and CDS 15-20 years ago ((2005-2010) can add a little more detail. One samples the number of companies created, credit rating down grades, out of business etc. Then the Birth and Death model is used to get a broader picture and the Credit Curves created by numerical and statistical models.
There are other methods too, such as using the Prices of CDS at different maturities (end date). Then using numerical models to generate the forward curve (i.e. the credit regime in the next few years)
So now we realize that what we think is an absolute value of a Unemployment or Bond Price is really a kind of guesstimate laundered through numerical models. What about the Bond Price or a Stock Price someone pays. Is that an absolute VALUE. Again the issue is that what was the mental or other analysis that went into that Price offer. Could it have been erroneous. eg. A dear friend and classmate participated in the Sri Lankan mob protests (Aragalaya) in 2022. One of his reasons was that the economy fell because of “unprecedented reductions of taxes resulting loss of revenue of 30%”. Erroneous thinking as it was 7% reduction in VAT taxes on transactions for goods and servicing. The reduction excluded VAT on Financial Services. It is an arithmetic impossibility to have 7% reduction in taxes to cause loss of revenue by 30%.
Anyway back to US Unemployment Model and excerpts from description
Difficulty in capturing information from business birth and death units is not unique to the CES program; virtually all current business surveys face these limitations. CES adjusts for these limitations explicitly, using a statistical modeling technique in conjunction with the sample for estimating employment for private-sector industries. Without the net birthādeath model-based adjustment, the CES nonfarm payroll employment estimates would be considerably less accurate.
You can read the steps in using data and creating the Unemployment figures here.
https://www.bls.gov/opub/hom/ces/calculation.htm#business-births-and-deaths
The BIG TAKE home, be it Unemployment Numbers or Bond Price, these are GUESSTIMATES laundered thru numerical and statistical models. Worse these are not indicative at inflexion times of economic change. i.e. Economic growth in the process of change to Economic Downturn or vice versa
Reference
(i) Novozhilov, A 2006: Biological applications of the theory of birth-and-death processes
In this review, we discuss applications of the theory of birth-and-death processes to problems in biology, primarily, those of evolutionary genomics. The mathematical principles of the theory of these processes are briefly described. Birth-and-death processes, with some straightforward additions such as innovation, are a simple, natural and formal framework for modeling a vast variety of biological processes such as population dynamics, speciation, genome evolution, including growth of paralogous gene families and horizontal gene transfer and somatic evolution of cancers