1. SEASONAL ADJUSTMENT BEA Advisory Committee May 11, 2012

2. What do users want? Data series that represent the concept they are said to measure to be as accurate as possible. In the US, they usually want a seasonally adjusted series In Europe and Asia, there is a healthy skepticism about the quality of SA data

3. Miscellaneous Thoughts Seasonal Adjustment is a lot more difficult than it might seem. Seasonal Adjustment is really forecasting. We make judgments that affect the outcome. There seems to be a communication gap between those who understand the inner workings of these programs and those who work with the data day to day.

4. Recommendations Need more research on situations like our “Great Recession” where we don’t just have one outlier to deal with X12-ARIMA doesn’t seem to be sensitive enough to detect outliers except major ones like Katrina on LA data Why does Tramo-Seats consistently produce a smoother seasonally adjusted series?

5. Recommendations Do benefits of concurrent seasonal adjustment offset problems it creates? Increased work load at the statistical agencies when faced with tight release schedules Additional uncertainty for users who need to forecast this month’s figure

6. Recommendations Census Bureau should be commended for the development of X13-SEATS We need an official release so it gets incorporated into major econometrics pkgs Need source code in C so it is more accessible. Most FORTRAN programmers have retired.

7. Recommendations Need greater transparency on how seasonal adjustment is done Very few descriptions of intervention analysis tell you how it was really done. Was it treated as an Additive Outlier, Level Shift, RAMP? Leaving out months seems to mean different things to different people

8. Conclusion Not clear whether the recession echo problem is caused by the tool (X12) or because the capabilities were not fully utilized or used correctly Even if the problem is due to user error, we need a tool that reasonably intelligent economic analysts can use without extensive training