Unemployment: Let them eat seasonal adjustments
Because the number one economic issue for ordinary Americans is jobs, the government’s employment report, released by the Bureau of Labor Statistics on the first Friday of every month, is likely the most important monthly report there is.
For instance, the public’s response to last Friday’s report, which supposedly showed declining unemployment, boosted the president’s approval rating almost instantaneously.
“Fifty percent of Americans in this new ABC News/Washington Post poll approve of Obama's job performance, the most since spring.”
According to ABC, the main reason for this was “the economy's gradual but unmistakable improvement, marked by the newly reported January unemployment rate of 8.3 percent, the lowest since a month after Obama took office.”
This is pure misinformation. It rests on “data” that is heavily manipulated for the specific purpose of deceiving the public. The real data reflect an economy still in decline.
The employment report includes two headline numbers, the unemployment rate and the number of jobs added. Gullible (or worse) media outlets like ABC fixate on these numbers, crowing about a “recovery” that’s supposedly been underway for more than two-and-a-half years.
So why aren’t people spending like there’s been any recovery? Because neither headline number is real. The entire “recovery” is out of David Copperfield’s apprenticeship manual.
Every month, government economists “adjust” the raw data reported from the ground, supposedly to reflect seasonal events like winter holiday hiring bursts. But how exactly these “seasonable adjustments” are made is anyone’s guess, since the BLS won’t say. (You know it’s embarrassing when the government, for all its huge mistakes, officially puts a paper bag over its head.)
The media ignores the raw employment data. But it’s in the report, right next to the seasonally adjusted data. Comparing the two reveals an effort to blunt the stench of middle America's rotting carcass.
The latest unemployment numbers are eye-openers. http://www.bls.gov/news.release/pdf/empsit.pdf
The headlines on Friday said the unemployment rate dropped to 8.3% based on a “surge” of some 243,000 new jobs. The stock market obediently rose by more than 150 points in response. But take a closer look and you’ll see the media touts for what they are.
By way of a single example, supposedly there were 33,000 new jobs—more than 1000 a day—created by “Food services and drinking places.” But that’s headline stuff. Reality is far different.
Table B-1, where these new jobs appear, also sets forth the raw truth. Rather than a gain of 33,000 restaurant and bar jobs, we see the loss of 206,000 jobs—for a total fantasy gain of +239,000 jobs.
What do you think about those 243,000 new jobs now? Hell, all but 4000 of them came just from “adjustments” to the number of bartenders and waiters. Can you say “fake”?
It gets worse when you stagger out of the bars, over-served by all the new help.
Take the total population of working age people in Table A1. It went up by 1.7 million people (to 242.3 million in January from 240.6 million in December). This surely added jobs, right? Nope. The absolute number of employed people actually dropped, and not just a little, but by 737,000.
The American economy is in a sustained decline.
So how on earth does the government purport to show an improved employment picture? By simply not counting a lot of working age people, putting upwards of 100 million of them—nearly one-third of the entire U.S. population—into a category called, “Not in labor force.” And every month the government does this, that category swells up. With this latest report, we learn that there are 88.8 million working age Americans who are not in the labor force. That's up a staggering 1.6 million from just a month ago.
Progressively lower percentages of people are participating in the labor force. The labor force participation rate is now 63.4%, down from 63.8% a month ago.
This statistical fudging did not come out of nowhere, which becomes crystal clear when tracing the data back through time.
Tellingly, the game-playing got seriously underway at exactly the same time that TARP was passed—October 2008. Back then, the labor force participation rate was 66.0%, where it had remained steadily for 5 straight years. http://data.bls.gov/timeseries/LNS11300000
Likewise, and not surprisingly, the number of people not in the labor force has exploded since the TARP bailout, from 79.6 million to 88.8 million people now. http://data.bls.gov/timeseries/LNU05000000
Obviously the sales pitch for TARP—the big banks have to be bailed out to benefit Main Street—was a perverse lie. As the real employment numbers show, Main Street is getting ground into dust. The only beneficiaries of TARP (and the alphabet soup of bailout programs from the Federal Reserve) have been Wall Street bankers.
Their bonuses for 2010 alone totaled more than $140 billion, smashing the previous record. We don’t know what total bonuses for 2011 will be—yet. That information will come soon. Supposedly the number will “plunge” by 20%. http://money.cnn.com/2011/11/08/news/economy/wall_street_bonus/index.htm
Even if that’s right, the bankers are line for another round of $100 billion-plus bonuses. And for what exactly?
You can bet dollars to donuts that the Wall Street’s media servants will point to the headline unemployment numbers for the answer.
That’s how the game has been played for more than 3 years. For Wall Street executives, it’s ever-huger piles of cash. For everyone else, it’s manipulated data.