The monthly jobs report always gets a lot of attention. Presidential candidates

Question

The monthly jobs report always gets a lot of attention. Presidential candidates refer to the report when it favors their position. Referring to the August 2012 report in which only 96,000 jobs were created, Republican presidential challenger Mitt Romney stated "the weak jobs report is devastating news for American workers and American families ... a harsh indictment of the president's handling of the economy." When the September 2012 report was released showing 114,000 jobs were created (and the previous report was revised upwards), some supporters of Romney claimed the data were tampered with for political reasons. The most famous statement, "Unbelievable jobs numbers...these Chicago guys will do anything..can't debate so change numbers," was made by former Chairman and CEO of General Electric. What do you think? The standard error of the monthly estimate is 55,000. Given that, what do you think of the difference between the two job reports?

Explanation / Answer

Given the value for August 2012 = 96000

The jobs for September 2012 =114000

The standard error =55000

Using the Central limit theorem

The z score=(114000-96000)/55000=0.327272

Using the tables we find the probability is 0.6283 or 62.83%

So there is a 62.83% probability of the event happening

Using 1 standard error above and below the mean and assuming 96000 as the mean

we get the interval

=96000-55000 to 96000+55000

=41000 to 151000

Since the value of 114000 is within the range we can say that the reports are not tampered

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