Case Shiller Home Price 'Boost' Disappears After Seasonal Adjustment; AP, S&P Like the Raw Numbers Better

While the vast majority of those in the establishment press doggedly insist on reporting seasonally adjusted numbers in most economic spheres, there is an odd exception: Standard & Poor's Case-Shiller Home Price Indices.

Not that it's completely the press's fault. S&P emphasizes the raw numbers over the seasonally adjusted ones, and for a pretty good reason: The raw numbers represent what's really happening on the ground with home prices. In the current economy, the seasonal calculations can't really be said to reflect typical seasonal patterns. Of course, this logic should apply to other key areas, particularly employment, but we (or maybe it's the reporters) are apparently not mature enough to understand large monthly swings in jobs added or lost, or able to see them in the context of previous years.

Given that the press usually hangs its hat on seasonal numbers, you'd think they'd be more than a little shy about copying S&P's press release, which today described a very small increase as a a "boost" in home prices, which disppeared after seasonal adjustment, as seen below:


Poof! After seasonal adjustment, the already highly questionable "boost" evaporates (since when is 0.7% or 0.8% a "boost," especially coming off bottom-feeding lows?). In five cities, the seasonal adjustment process, suspect as it is, turned an increase into a decrease.

As one would expect, Derek Kravitz at the Associated Press was among Case/Shiller's biggest "boosters":

Spring buying boosts home prices in 13 US cities


Home prices in most major U.S. cities are rising for the first time in eight months, boosted by an annual wave of spring buying. Analysts cautioned that the increases may be temporary and don't signal a rebound for the depressed home market.


Prices rose in 13 of the 20 cities tracked by the Standard & Poor's/Case-Shiller home-price index, according to the April report released Tuesday. The sharpest increases were in Washington, D.C. The next-largest were in San Francisco, Atlanta and Seattle.


(Paragraph 5)


... The 0.7 percent increase in April was the first rise since July. The positive data came with a caveat: The figures weren't adjusted for seasonal factors, such as the buying that normally picks up in spring. Once the numbers are adjusted, prices actually fell in April.


David M. Blitzer, chairman of S&P's index committee, said the rise in the index was a "welcome shift from recent months." But he noted that much of the improvement was likely due to the start of the buying season.

If one takes the seasonal adjustment process seriously (otherwise, why bother?), why would Mr. Blitzer, with a negative seasonally adjusted result, speak of a "welcome shift" or an "improvement"?

To be fair in S&P's case, in a volatile economy which spent 12 months (July 2008 - June 2009) in contraction, and which has had housing and labor markets in awful shape for over three years, the raw numbers should carry more weight. But in the economy of the past three years, that argument is equally valid with data relating to jobs, unemployment, and other metrics -- and the establishment press would never dream of getting its hands dirty by looking at those raw numbers. Instead, I daresay most of them really believe, for example, that the economy really did add 54,000 jobs in May, when it actually added 682,000 (pending revisions).

In a Pajamas Media column earlier this month, I demonstrated that if the real job additions which occurred in May had instead occurred in May of 2007, the seasonally adjusted result would, instead of coming in at 54,000 job additions, have come in with a minus sign in front of it, possibly to the tune of as many as 100,000 or more jobs lost. Luckily for the Obama administration, the past three years have been so bad that the 682,000 jobs actually added in May looks good by comparison (it looks absolutely lousy compared to every year from 2004 to 2007).

Unluckily for us, it doesn't change the fact that the job market is not recovering in a meaningful and consistent way, and may be heading further south. Worse, the seasonal adjustments to the jobs numbers in the next few months seem destined to at least partially paper over how bad things are -- and you can guarantee that the establishment business press won't note it.

Cross-posted at

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.