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Resolving the Payroll-vs.-Household Debate

Since the future is unknowable, the best we can do is make imperfect predictions based upon what we know at present. I give other analysts and strategists leeway when their conjectures prove incorrect -- as long as their models are rigorous and their intentions sincere. Call it the rule of "cutting the other guy some slack."

I have, however, no tolerance for erroneous economic expectations based upon faulty data, hidden agendas or personal biases. We saw examples of this during the heyday of the bubble years, when analysts regularly skewed their research in order to serve their investment banker masters, much to the detriment of investors.

This most recent episode with the household/payroll surveys has been similarly disingenuous.

To quote John Irons, senior economic research and policy analyst at OMB Watch, a Washington, D.C., nonprofit: "The [fastest] way to lose all economic credibility is to claim that either, one, the household survey is a better measure of employment than the payroll survey, or two, that 'economists disagree' about which survey should be used."

I couldn't agree more.

My research assistant Julie Heckman, soon to be heading back to Cornell, provided invaluable help with this column.

Barry Ritholtz is chief market strategist for Maxim Group, where his research and market analysis are used by the firm's portfolio managers and clients in the U.S., Europe and Japan. He also publishes The Big Picture, his macro perspectives on the economy and geopolitics, entertainment and technology industries. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Ritholtz appreciates your feedback and invites you to send it to barry.ritholtz@thestreet.com.
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