Seasonal Adjustment
Categories: Accounting
See: Seasonal Industry. See: Seasonally Adjusted Data.
The demand for energy was massive in August. It was the hottest summer on record, and we all ran our A/C units 24/7 (screw you, polar bears). But then...coolness broke out. September was chill, and October was the third bear's porridge; we didn't need to run the heat or the A/C at all.
The result? Demands for energy spend decreased massively to the power plant nearby. Were they worried that nobody would be using power any more? Hardly. They knew that the low power usage in October was a seasonal adjustment after the big hot blast summers drove their turbines and kept their populations cool.
Seasonal adjustment. Happens in many industries. And yes, the polar bears will just have to suck it up.
Related or Semi-related Video
Econ: What is Seasonally Adjusted Data?0 Views
And finance Allah Shmoop What is seasonally adjusted data or
S a D or sad Dr Elek Troy did That
guy builds a new weather control advice as part of
his evil plan for world domination He dumps fifty inches
of snow on Phoenix We're not sure how world domination
follows from a big snowstorm in Phoenix but well you
know we're sure Dr Elek Troy knows what he's doing
Dumping snow in the desert Well one kind of seasonal
adjustment Not really the one we're talking about here but
we'll get to that in a sec Captain Condor this
guy flies from his secret layer the superhero lair high
up in the Sierra Nevada mountains He captures Doctor Elec
Troy destroys the weather device and saves the day Cut
to you You're a researcher for the National Weather Service
You're locked in a basement of the Washington D C
Headquarters with no windows and no other people here surrounded
only by the blinking lights of whether measurement equipment You
don't have any cell phone reception or Internet access for
you All you know is that your equipment shows fifty
inches of snow in Phoenix You call your boss the
Phoenix is the snowiest place in the nation called the
press Get started on your game Changing academic paper on
climate change Well wait a minute The fifty inches of
snow doesn't indicate a really change in Phoenix is long
term snowfall It's just a one time event in this
case caused by a super villain you know as sometimes
happens art lesson here you can't always trust raw data
Numbers need contacts right The need for context leads us
to relying on seasonally adjusted numbers So yeah sometimes raw
data uncooked data It's very unhealthy to eat can be
misleading To counteract this fact while some economic information gets
reported on a seasonally adjusted basis that is the numbers
get massaged to take into account the natural impact of
the time of year For instance the unemployment rate well
This stat gets reported on a seasonally adjusted basis Every
year going into Christmas companies hire additional seasonal workers Package
delivery People need extra drivers Amazon and other retailers need
extra people to process orders Malls need elves to put
crying kids onto the lapse of Santa's suicide Hotlines need
extra people to take distress calls from you know family
dinners on an unadjusted basis the unemployment rate would always
decline Headed into the holiday season all these extra workers
would lead to lower unemployment data every year But eventually
Christmas comes and Christmas goes Everyone opens their presence and
while stuffs everything into closets for potential re gifting next
year Yeah Bob we're looking at you All the extra
holiday workers are back on unemployment at least until spring
when they can start lining up for summer gigs Yeah
another season like maybe they get jobs as lifeguards or
stand up comedians on cruise ships So going into the
holidays every year would see a drop in unemployment with
unjust ID data And then after the holidays there would
always be a rise in the unemployment rate Well if
the figure was reported this way it would be hard
to read much of the movement during this time of
year would be a result of seasonal factors The unadjusted
statistics wouldn't mean muchas well any kind of economic indicator
It would be hard to see what's really going on
in the actual economy from these numbers Aside from the
usual ticks up and down well is this year better
than last year How does this year's stack up historically
How's the labor market really doing Yeah it'd be hard
to tell Much of the data would represent seasonal noise
So the economist strip out the seasonal movements They make
guesses based on what's happened before About what the data
should do is a result of these seasonal factors They
then take the seasonal moves out and only report the
changes that don't have to do with seasonal workers Instead
the numbers tracked the underlying health of the labor market
like they're supposed to Well of course if you spend
your winters as a mall Santa you're springs dressed like
the Easter Bunny your summers as a snow cone sales
person and you're autumns as a Jack o lantern carver
wealth And you might never get counted in any seasonally 00:04:03.72 --> [endTime] adjusted numbers so you know good for you