Email, Menzie D. Chinn, professor of Public Affairs and Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin, Jan. 26, 2015

2:58 p.m.

On the claim, it is as specious as the one made by Jack Welch about the Chicago boys distorting the employment series. See http://econbrowser.com/archives/2012/10/watergate_iranc

On the SGS unemployment rate, it looks like just a hodge podge of adding together unemployed and underemployed, and kicking in an estimate of long term discouraged worked. By virtue of putting in underemployed, it can’t really be an unemployment rate. And I’m not sure how the math to get the long term discouraged workers works. If SGS’s techniques for unemployment match those it used for price statistics, I would run away as far as possible from it. On the SGS alternate price series, see http://econbrowser.com/archives/2008/09/shadowstats_deb

By the way, this person tried to reverse engineer the SGS series. The calculation implies a crazy big (sorry for the technical term) number of long term discouraged workers.

Hope that helps. Good luck!

PS: Here is my take on Governor Perry’s acumen as an economist:

http://econbrowser.com/archives/2011/08/fidei_defensor

Prof. Menzie D. Chinn

Robert M. La Follette School of Public Affairs, and

Mailing Address: Department of Economics

University of Wisconsin

From: Selby, Gardner (CMG-Austin) [mailto:wgselby@statesman.com]

Sent: Monday, January 26, 2015 3:17 PM

To: Chinn, Menzie

Subject: Texas reporter, following up

I just got a fuller transcript of Perry’s comments. This change anything from your thoughts/comments?

"We've got the lowest participation rate since the late 1970s,” Perry said, “when Jimmy Carter was president. I'm talking about participation in the work force. That's of really great concern for me. I mean, who is it standing up for these people that I call the uncounted? They've lost hope that they can even get a job, so they're not even counted. When you look at the unemployment rate today, that's not the true unemployment rate, it's been massaged, it's been doctors."

3:23 p.m.

It’s true that had the labor force participation rate not declined, and we used the number of employed actually observed to calculate a rate, then mechanically the unemployment rate would have to be higher.

However, some share of the labor force participation rate decline is due to demographics (CBO has some numbers, don’t know where for sure, I think it’s a half), and some is not. To the extent that some of the decline is *not* demographics induced, one could plausibly say the more accurately measured unemployment rate would be higher than reported. But it’s not the case that the statisticians “changed” the procedure for calculations in order to change the reported unemployment number – given my definition of “doctored”, then what he alleges is incorrect.

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