Spectral Evaluation of BLS and Census Revised Seasonal Adjustment Procedures

Abstract

This paper presents spectral criteria to evaluate seasonal adjustment procedures, and applies them to the estimated spectral properties of the monthly unemployment series, as adjusted by past and present methods of the Bureau of Labor Statistics (BLS) and of the Census Bureau. It also re-examines some conclusions reported in the Gordon Committee Report (1962) and in Nerlove (1964) on past methods of adjustment. The paper concludes that (1) the loss in spectral power between the unadjusted and adjusted series spectra over most of the frequency range could arise with a satisfactory adjustment, (2) the excessive loss of spectral power at seasonal and trend-cycle frequencies present in past methods of adjustment has been reduced in present methods, (3) the effect of deviations from desired spectral properties on the uses of seasonally adjusted data must be examined in the time domain; for certain applications they have been found to be unimportant.