Government Misrepresents Employment Picture
While everyone is popping the champagne corks over the fact that the Bureau of Labor Statistics says that 243,000 jobs were created in January, the facts are slightly different.
Lee Alder notes:
The seasonal adjustment fudge that the Gummit adds to the mix grossly overstated what the actual survey data showed. Here’s a picture. The red line is the actual survey numbers. The blue line is the fake seasonally adjusted number.Remember: Red… actual. Blue… fake.Just so you know your eyes aren’t playing tricks on you, let’s zoom in to just the past 13 months.There you have it. The headline, fake, number was up by 243,000, purportedly the biggest increase since 2006. But what’s this? The actual survey number showed a decrease of 1.1 million jobs. In the world of seasonally adjusted government data, down can be up.
Karl Denninger writes:
Zero Hedge points out:
It appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
Chart below shows it all – that jump is not a fat finger!
And Labor Force Participation:
This is the largest absolute jump in ‘Persons Not In Labor Force’ on record…and biggest percentage jump in 30 years.
- In the last year, the civilian population rose by 3,565,000. Yet the labor force only rose by 1,145,000. Those not in the labor force rose by 2,420,000.
- In January, the Civilian Labor Force rose by 508,000.
- In January, those “Not in Labor Force” rose by an amazing 1,177,000. If you are not in the labor force, you are not counted as unemployed.
- Participation Rate fell .3 to 63.7%, taking out a 1984 low
- Were it not for people dropping out of the labor force, the unemployment rate would be well over 11%.
Some of those labor force numbers are due to annual revisions. However, the point remains: People are dropping out of the labor force at an astounding, almost unbelievable rate, holding the unemployment rate artificially low.***
The official unemployment rate is 8.3%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 15.1%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Grossly Distorted Statistics
Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers. Digging under the surface, the drop in the unemployment rate is nothing but a statistical mirage.
In January, those “Not in Labor Force” rose by a staggering 1,177,000. Things are much worse than the reported numbers indicate.
And TrimTabs says:
Either there is something massively changed in the income tax collection world, or there is something very, very suspicious about today’s BLS hugely positive number.
Actual jobs, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments – made at the sole discretion of the Bureau of Labor Statistics economists – that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs.
Update: see this rebuttal.