Tuesday, July 17, 2012

Seasonal adjustment

Some economic trends (such as unemployment and consumption of certain goods) take on a seasonal component; i.e., the trends consistently go up or down every year in a cycle. Hence, to remove such contamination and examine the true underlying trend, such trends must be reported only after executing seasonal adjustment (overview here, in-depth guide to the actual process here).

Examples of trends that need to be seasonally adjusted, from this post on the Conversable Economist:



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