Okun's Law

Wow.  I'm blind.  The numbers don't seem to add up.

http://www.zerohedge.com/news/jon-hilsenrath-scratching-his-and-ny-feds-head-over-job-number-discrepancy

The WSJ ran the graphic to the left.  Okun's law suggests empirically that for every 1% decline in unemployment GDP grows at 2.5%.  So in the graphic GDP is on the Y axis and unemployment is on the X axis.  Notice that the unemployment rate is quarterly.  This is awful close to 1% so if two quarters are measured there should have been a 5% increase in GDP.  GDP actually increased by 1.6%.  The article claims that the government is misleading us.  I think the article is just making a stink.

Okun's law is an empirical relationship and not a law.  There can be several reasons why GDP didn't grow.  One reason is that machines have been substituted for labor.  Another is that employers are just working their labor force less and giving voluntary layoffs.  Unemployment is hard to measure any way.

Still, I love the relationship of the data.  It's a beautiful thing.