It’s not new news that the Labor Force Participation Rate has been falling .
What struck me in March’s employment stats was that the LFPR is still dropping
Many economists say it’s simply demographics — it’s old folks retiring.
Partially true, but certainly not the whole story.
Last Friday, the President was spinning the 126,000 jobs gain as a continuation of the longest consecutive period of (meager) monthly jobs gains.
OK, I added the meager part …
And, he touted how he’d added 12 million jobs to the economy since he took office.
Not to nit-pick, but it’s 10 million since he took office … 12 million since the slide bottomed out.
.
OK, so 2 million more people are working since the worst recession since the depression.
That’s pretty good, right?
Last Friday, the BLS reported that the U.S. economy added 126,000 jobs.
That’s about half of the consensus forecast (which was about the prior 12 months average).
Look at the chart and tell me if your see a pattern …
Lots of hoopla last week that the unemployment employment rate dropped to 6.1% as employers added 288,000 jobs
Yep, 288k jobs added … which continues a year-over-year running rate growth in employment of slightly less than 2% … a little less than real GDP year-over-year growth.
But, there’s more to the story.
Let’s dissect that 288,000 …
According to the Feds, the economy added 217,000 jobs in May … that’s good.
Big deal made of the fact that the economy has regained all of the jobs lost in the finance-induced recession.
But, save the high fives …that’s only part of the story.
The rest of the story doesn’t look nearly as rosy.
The headline: unemployment rate drops to 6.3%
Boom times in America, right?
Hmmm.
Here’s what has me scratching my head …
The headline: 288K jobs added.
Boom times in America, right?
Hmmm.
Here’s what has me scratching my head …
First, some technical background.
There are two BLS surveys: the Establishment Survey which queries businesses and the Household Survey which queries individuals, i.e. people.
The Establishment Survey is a larger sample, but has a huge data whole – new and small businesses — that gets plugged with a SWAG.
The Household Survey is smaller (about 10,000 respondents) … but big enough that it’s treated as the gold standard for calculating the unemployment rate.
It was the Establishment Survey that reported 288K jobs were added.
Guess what?
The Household Survey said the opposite … that 73K jobs were lost.
Let’s take this a step further …
Earlier last weeks, the Feds reported that GDP was essentially flat in the first quarter … only increasing by 1/10th of a percentage point.
Despite a flat economy, the BLS says that employers were adding jobs like drunken sailors.
Does that make sense to you?
My view: one of the two numbers has to be wrong … either the GDP or the employment numbers … and, given the job losses reported on the Household Survey … I’m betting the 288K job gain is more illusion than reality.
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This morning, the WSJ published an editorial titled “The Hidden Rot in the Jobs Numbers ” by Prof. Edward Lazear, who was chairman of the president’s Council of Economic Advisers from 2006-09, is a professor at Stanford University’s Graduate School of Business and a fellow at the Hoover Institution.
Strong credentials, right?
The punch line: “Hours worked are declining, resulting in the equivalent of a net loss of 100,000 jobs since September.”
No kidding, Prof. Lazear?
Loyal HomaFiles readers are already aware of that … assuming that they read last Monday’s post: Smokin’: Employment growth exceeds expectations … oh, really?
Gotta crow a bit on this one … beat the WSJ by a week.
Here’s what we said last Monday:
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Smokin’: Employment growth exceeds expectations … oh, really?
The headlines are that 175,000 jobs were added in February.
Proof positive that the Obama economy is kicking in.
======
Hate to rain on the parade, but ….
The headlines last Friday were that 175,000 jobs were added in February.
Proof positive that the Obama economy is kicking in.
======
Hate to rain on the parade, but ….
The Feds reported that the unemployment rate dropped to 7.3% … despite tepid job growth – fewer jobs added than expected, and those that were added were in retail & hospitality.
Most analysts quickly pointed out that the unemployment rate dropped because the number of people dropping out of the labor force was about twice the number of jobs added.
In technical jargon, the labor force participation rate dropped to a 35 year low.
=====
A complementary metric that combines the effect of the Unemployment Rate and the Labor Force Participation Rate is the Civilian Employment to Population Ratio – the percentage of the working age population that has a job.
That rate dropped about 4 percentage points during the recession … then has flatlined during the “recovery”.
That is, job growth has barely kept up with population growth.
=====
What about my favorite? The downmixing to more part time positions?
You may remember that the BLS reported tha, for July, the unemployment rate continued its decline … all the way down to 7.4%.
Good news. right.
Not so fast …
Couple of charts – and conflicting interpretations — caught my eye.
First, Wall Street Daily posted their version of an analysis revealing that over 3-in-4 jobs created in 2013 have been part-time jobs.
Their conclusion: “it’s the scariest chart ever”.
Maybe a bit of hyperbole, but certainly worth watching
Here’s another take on the trend …
We’ve been frequently posting about the way employment is “down-mixing” from full-time to part-time jobs.
I personally think that the mix change is one of the most important trends in the economy.
Finally, the trend has become so significant that even the mass media has started reporting on it..
Last Friday … the BLS headline was “Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent.”
High fives, right?
Not so fast.
Yep, total private employment went up 114.186 million … an increase of 162,000 jobs … that’s true.
And, though the job growth was below expectations and below the number usually cited as being required to keep the unemployment rate constant … the increasingly flakey unemployment rate dropped to 7.4%
That’s good news, too … right?
Not so fast.
Here’s the HomaFiles Employment Index … the way to cut to the chase on the employment numbers …
There were high fives last Friday when the BLS reported a level unemployment rate and – based on the employer survey– 195,000 new jobs.
The numbers from the household survey were less rosy … a gain of 120k jobs.
Still, positive job growth.
Here’s the rub …
The new jobs (and more) were part-time jobs … up 360k on the population survey.
In fact, full-time jobs declined in June by 240k jobs.
=====
Let’s put those numbers in a historical context …
Interesting chart from Calculated Risk … plotting the unemployment rat – by state – from high to low.
Here’s the chart … below are some highlights.
Highlights:
The BLS numbers get reported at 8:30 this morning.
I always reference Gallup as an indicator.
For May, Gallup’s seasonally adjusted U.S. unemployment rate was 8.2% … up .4% from 7.8% in April.
My bet: weak jobs growth ( probably 125,000) … but BLS will find a way to keep the official unemployment rate constant at 7.5%
* * * * *
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Interesting chart in today’s WSJ … I’ve added a few highlights.
Basic point raised in the article: The reported drop in the unemployment rate is masking a more fundamental weakness in the job market.
As we’ve harped before, the employment to population ratio is down about 5 pp from the pre-crisis long-term average … and despite a decline in the unemployment rate, the employment to population ratio has stayed flat over the past couple of years.
The culprits keeping the employment to population ratio low:
Our prior analyses allocate about 1/3 of the drop to demographics, about 1/2 to lack of jobs and the rest to social programs and disability bumps.
Note from the employment to population chart …
1) The 20 year pre-crisis trend …. hovered around 63%.
2) The steady increase during the 1980’s … you know, the Reagan years … more growth, fewer handouts.
3) The similarity in the levels during the Carter and Obama years … coincidence?
* * * * *
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Business Insider reports that …
Bank of America economist Michelle Mayer has put out a note on one of the more controversial subjects in economics these days: the Labor Force Participation Rate.
The Unemployment Rate has been grinding down, but everyone has noticed that Labor Force Participation has dropped as well, and it’s been argued that the exodus of people from the workforce (who no longer count as unemployed when they’re not working) undermine the idea of workforce improvement.
BI – repping for Team O — takes delight observing that: “Mayer’s note comes down firmly on the side of saying that the decline in Labor Force Participation is largely secular, and not primarily about the economic malaise.
Hold your pants on, BI.
Here’s how & why Mayer’s analysis overstates the secular impact and understates the economic impact.
Yesterday we posted “Connecting the dots: ObamaCare may be creating jobs!”
The punch line: many companies are reported to be down mixing their work forces by reducing full-timers to part-time status … and hiring additional part-timers to fill their needs.
Today, let’s look at some macro numbers.
Total employment dropped 8.2 million during the recession.
5.3 million of those 8.2 million jobs have been recovered … but total employment is still down 2.9 million from its pre-recession peak.
Note that total employment is up 1.4 million since President Obama’s Inauguration in January 2009.
Keep that number in mind … 1.4 million.
Things get more interesting with a little drilling down …
In a couple of the past week’s posts we’ve been exploring the employment down mixing from full-time to part-time jobs.
I personally think that it is one of the most important – and least reported trends in the economy.
Flashback to last Friday … the BLS headline was that 165,000 jobs were added in April and the unemployment rate dropped to 7.5%
That news flash elicited giddy re-reporting … e.g. Business Insider’s “STOCKS GO WILD AFTER AWESOME JOBS REPORT” … “awesome” and all caps,
Yep, total employment went up 165,000 jobs … that’s true
But, here’s the rest of the story …
You read that right.
The obvious has become evident to me …
The BLS reported that employment rose by 165,000 in April, and the unemployment rate was little changed at 7.5 percent,
Hmmm.
Memory jogged back to last week’s post re: the increasing number of part-timers:
Obvious question: how many of the 165,000 were part-timers?
According to the Fed’s data base, part-time employment increased by 229,000.
If true, that means that full-time employment dropped.
Hmmm again.
What’s going on?
Here’s the headline: “Non-Farm Payrolls Rise More Than Expected, Up by 165,000 in April; Unemployment Rate Drops to 7.5%”.
I guess that the Sequester – rather than inhibiting job growth – actually spurred job growth.
Not really.
But, it means team Obama will have to re-write its press release for today.
= = = = =
Reminder: April ADP’s number was 159k … 30k below the consensus forecast … and, ADP revised March down by about 20k jobs..
* * * * *
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Remember March’s employment numbers?
Despite paltry job growth – less than population growth — the unemployment rate went down – because about 500,000 folks dropped out of the labor force.
The LFPR (labor force participation rate) dropped to 63.2%.
The Atlantic published an interesting recap of LFPRs by age group over time.
Note that the LFPR has been …
While older folks are participating more in the labor force, their LFPR is substantially less than other age groups (except teens) … so the aging population is “mixing down the overall LFPR.
What’s up with teens?
* * * * *
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Former Obama economic adviser Austan Goolsbee was back on TV saying that more than 60% of the decline in the labor force participation rate (LFPR) is simple demographics … old people retiring.
Last week, I posted a back of the envelop analysis that said seniors retiring is less than 1/3 of the blame.
Today, let’s do the analysis more rigorously, using a technique that I teach called PVA – Profit Variance Analysis ….
Since las t Friday’s jobs report and the flood of misdirection coming out of Washington, I’ve been trolling the BLS numbers.
Here are a couple that caught my eye …
Since 1950, the labor force participation rate (LFPR) among adult males has fallen from almost 90% to below 70% today.
Wow. Almost 1 of 5 men have opted out.
= = = = =
During the same period – 1950 to today – adult women’s LFPR has increased from about 33% to about 60%.
Best hypotheses I can conjure are that
(1) working women has freed some men to stay-at-me to either be Mr. Mom ,,, or just slack off
(2) more capable women have squeezed men out of jobs?
Any alternative explanations out there?
* * * * *
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Here’s some stuff that you won’t see other places …
OK, everybody knows that – despite paltry job growth — the unemployment rate dropped from 7.7% to 7.6%.
Why?
Because about 500,000 people dropped out of the labor force.
The “Labor Force Participation Rate” dropped to 63.2%
= = = = =
Note that in the past couple of years the labor force participation rate has dropped about 3 percentage points … from over 66% to 63.2%
So, why is the Labor Force Participation Rate dropping?
Dr. Alan Krueger — Chairman of President Barack Obama’s Council of Economic Advisers – asserted on CNBC that the decline in the labor force participation rate is simply demographics.
Old people are an increasing part of the population and they are retiring.
Hmmm.
Nobody challenged him because it’s obviously true, right?
Not so fast.
Now, here are the nums that you probably won’t see any place else ….
The reported unemployment rate dropped to 7.6% despite a meager 88,000 jobs being added in March.
It’s conventional wisdom that you need more than 200,000 jobs added to move the needle.
So, why did the UE rate go down.
You guessed it: the Labor Force Participation Rate dipped again … more people (about 500,000) stopped looking for jobs … and weren’t counted in the unemployment numbers.
The administration shills have been harping on the Sequester to explain the numbers (even though it didn’t really kick in during March).
They dismiss the idea that the slowdown could be due to:
Nope, just not enough government spending.
* * * * *
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Last month, the BLS reported a decline in the unemployment rate to 7.7%.
Most economists and other pundits are predicting that the March UE rate – which will be reported tomorrow – will remain at that level.
But, yesterday’s ADP employment numbers were almost 20% below the consensus estimates … 185k vs. 225k.
Today, the BLS reported: “In the week ending March 30, the advance figure for seasonally adjusted initial claims was 385,000, an increase of 28,000 from the previous week’s unrevised figure of 357,000. The 4-week moving average was 354,250, an increase of 11,250 from the previous week’s unrevised average of 343,000.”
Here’s another contra indicator … the Gallup Daily Tracking of Employment.
When the daily numbers for the past 3 months are averaged, there’s a big spike upward from February to March.
Gallup is again pegging the unemployment rate over 8%.
Bottom line: If the consensus 7.7% is the over-under …. I’m betting the over, for sure.
* * * * *
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Seems like many folks have lost interest, but tomorrow, the official BLS employment numbers come out.
Initial unemployment claims are still hovering around 350,000 per week … suggesting that the employment picture is staying pretty stable.
As a cross-check to the government numbers, I like to compare them with Gallup’s daily tracking poll.
Hmmm.
Since mid-February , Gallup’s measured unemployment rate has been rising and, in the past week or so, has broken back up above 8%
Wonder what the BLS will report tomorrow.
I’m betting the under …
* * * * *
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The “Establishment Survey” provided the “headline number” that 146,000 jobs were added … from 133,706,000 employed in Oct. to 133,852,000 Nov.
* * * * *
And, the unemployment rate dropped from 7.9% to 7.7%.
* * * * *
But, the population of working age adults increased by 191,000 – more than the number of added jobs … from 243,983,000 in Oct. to 244,174,000 in Nov.
That should increase the unemployment rate, right?
* * * * *
More important, the “Household Survey” – the basis of the unemployment rate calculation — reported that 122,000 jobs were LOST… from 143,384,000 employed in Oct. to 143,262,000 Nov.
For sure, that should increase the unemployment rate, right?
* * * * *
But the unemployment rate didn’t go up, it went down … because the civilian labor force CONTRACTED by 350,000 … from 155,641,000 in Oct. to 155,291,000 Nov.
That is, 350,000 people stopped looking for work and were no longer counted as unemployed..
* * * * *
Said differently, the labor force participation rate dropped … and is now about 2.2 percentage points lower than it was when Obama took office
* * * * *
And, consumer confidence dipped, so don’t be surprised if even more people stop looking for jobs.
* * * * *
Bottom line: Not your classic turnaround … but if enough people stop looking for jobs, we’ll have this unemployment mess fixed in no time.
Ouch !
* * * * *
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Hot off the presses …
The BLS reported that 146,000 jobs were added in November … below October … below the 12 month rolling average … and below the 200k that most economists say is what’s required to dent the unemployment rate …
* * * * *
… But, magically, the unemployment rate dropped by 2-tenths of a percent to 7.7% … hmmm.
* * * * *
Most interesting number: October’s government employment number was revised down by about 50,000
Hmmm.
Yesterday in our post Gotcha: About those rosy unemployment stats … we showed how the bump in government employment accounted for most of the decline in the unemployment rate running up to the election.
Seems that that number was a tad inflated.
Surprise, surprise, surprise.
Wouldn’t you think the government would know how many employees are on the payroll?
* * * * *
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First, glance at what’s been going on with government employment the past couple of months
… about 1 million employees were added to government payrolls from June 2012 until election day.
Hmmm.
* * * * *
Now, take a gander at Gallup’s daily tracking of unemployment.
Note that Gallup’s unemployment rate dropped by about a point in the run-up to the election.
Virtually all of that drop is attributable to the bump in government employees.
Double hmmm.
And, Gallup’s unemployment rate is up about 3/4’s of a percentage point since the election.
Triple hmmm.
I thought that Team Obama had this economy turned around …
Oops.
* * * * *
Question: Tell me again how higher tax rates will help a faltering economy?
Unless the BLS fudges the number tomorrow, the GOP may finally have an arrow in their fiscal cliff quiver.
* * * * *
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Unbelievable !
Now that the election is done, the BLS has “caught up” on initial jobless claims reporting … their words, not mine.
Here’s a shocker …
They’ve figured out that unemployment is more of a problem than they’ve been reporting.
In the week ending November 10, the advance figure for seasonally adjusted initial claims was 439,000, an increase of 78,000 from the previous week’s revised figure of 361,000.
The 4-week moving average was 383,750, an increase of 11,750 from the previous week’s revised average of 372,000.
The consensus forecast for this week –- based on prior weeks’ reporting – was 375,000 … 64K lower than the BLS’ surprise number.
I say: Let’s raise taxes and get this economy moving again …
= = = = =
Technical note: While blame will be laid on Hurricane Sandy, keep in mind that (1) hurricanes temporarily boost employment of construction & trades workers, and (2) the affected areas were without electricty and many government offices (e.g. FEMA outposts) were closed … so, these initial unemployment claims are probably under-reported (as usual) … the fuller impact of the hurricane will show up in the next couple of weeks.
= = = = =
Ohio & PA
The highest numbers of new filings came from Pennsylvania and Ohio, where there were thousands of layoffs in the construction, manufacturing, and automobile industries. During his campaign, President Obama highlighted his record of job creation in those states — Ohio in particular. Source
Oops.
* * * * *
As Gomer Pyle would say: Suprise, suprise, suprise.
This is absolutely unbelievable …
The BLS streak — understating initial unemployment claims – ended this week.
In all the prior 26 election season weeks, the BLS’s “headline number” under-reported initial unemployment claims … and cast the jobs situation as brighter than it really was.
The election was Tuesday, right?
Well, guess what.
Here’s what the BLS report this morning … read it carefully.
English translation: Some how, the BLS was miraculously able to eliminate the reporting bias that had been consistently evident in the run up to the election.
Frankly, I’d expected them to wait a few weeks to create some distance from the election … then “modify” their reporting.
Nope.
Tell me again how the BLS is just a group of apolitical bureaucrats cranking out consistently reported facts.
The good news is that I can finally stop tracking and reporting the streak.
Quick, somebody call Jack Welch…
= = = = =
The “Establishment Survey” of employers reported that 171,000 jobs were added in October.
The “Household Survey” … the basis of the unemployment rate calculation … reported that 410,000 jobs were added in October.
That’s on top of the 873,000 jobs reportedly added in September … when the Establishment Survey reported 114,000 jobs added.
So, the Household Survey says that 1,283,000 jobs were added in September and October.
The Establishment Survey says that employers added 255,000 jobs in September and October.
The difference is roughly 1 million jobs … a big difference which, in many quarters, would be considered statistically significant.
For example, if the October Household Survey had claimed the same 171,000 as the Establishment Survey, the unemployment rate would’ve bumped to 8% … not 7.9%.
And, if the Household Survey had been in alignment with the Establishment Survey in both September and October, then the unemployment rate would be about 8.5%.
Draw you own conclusions.
Yeah, yeah, yeah … I’m getting as tired writing about it as you’re getting reading about it.
But, the BLS streak — understating initial claims – continued this week.
Now we’re up to at least 26 election season weeks in a row that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on today’s BLS report, the number for the week ending October 20 was revised upward from 369,000 to 372,000 … making this week’s headline look 3,000 better.
These guys can’t be this sloppy or this stupid … can they?
= = = = =
To put today’s number in context. let’s flashback to the chart in yesterday’s post .
The reported 4-week moving average is 374,000.
So, if the relationship of inital unemployment claims and the unemployment rate holds, tomorrow’s BLS report should be an unemployment rate of about 8.1%
That’s what all of my analyses say that the number is … but I’m still betting the under.
I think the BLS will fudge the numbers to keep the unemployment rate under 8%.
We’ll see tomorrow.
Last month, there was a “discontinuity” between jobs added as reported by the BLS’ establishment survey of employers (114k jobs added) and the household survey (873k).
The spurt in the latter drove the unemployment rate calculation (7.8%) which raised many eyebrows.
So, what to expect this Friday?
Looking back to the beginning of 2011, job growth via the employer survey has averaged 150,000 per month; the household survey has averaged 179,000.
Said differently, the employer survey has reported about 3 million jobs added; the household survey has reported about 3.6 million jobs added.
Below is a chart that indexes the two series back to January 2011.
Note that for the past couple of months, the less stable household survey has bounced over and under the employer survey.
That’s what you’d expect for two comparable data series drawn from different samples.
So, statistically speaking, I’d expect one of two outcomes this Friday … either:
1) The household series “averages out” and bounces under the employer number … showing a decline of about 350k jobs and a a higher unemployment rate, or
2) The household series “serially correlates” (i.e. continues a high run) … and burps out another sizable increase in employment (say, 250k) … and another reduction in the unemployment rate.
If #1 happens, Team Obama will argue that you shouldn’t place too much weight on one monthly number … an argument that they shelved last month.
If #2 happens, Team Romney (and Jack Welch) will claim book-cooking again.
Either way, I think voters will yawn since they believe so little of what gets spewed out these days …
Hurricane Sandy has put the BLS between a rock and a hard place.
There are 3 scenarios:
1) The BLS hides behind Sandy’s skirt-tails and takes an incomplete — failing to report the most important number in the most important election … until the election is over. Just imagine if Obama wins and the BLS reports next week (or next month) that the unemployment rate went back up to 7.9% or 8% or higher.
2) The BLS rushes a preliminary number that shows the unemployment rate going down to, say, 7.8% … and then revises it upward after the election. Think, the BLS streak of under-reporting initial unemployment claims.
3) The BLS reports that the unemployment rate went down again as still another 850,000 folks find part-time work somewhere, someplace … and, Jack Welch goes nuts.
4) The BLS reports on time that the unemployment rate went up and Obama orders a DOJ investigation.
* * * * *
My bet: They’ll report on time that the unemployment rate clicked up to 7.9% … it’s the best “managed” number …. let’s Obama crow that it’s under the magic 8% … and, let’s Romney point out that it’s going in the wrong direction.
Based on the numbers, I’d expect the unemploymen rate to bounce back up to at least 8%.
Here’s my logic…
Initial unemployment claims should track pretty closely with the reported unemployment rate, right?
Well, they do usually … but didn’t last month when the miraculous 7.8% was reported.
Just eyeballing the chart below – which maps the 4-week moving average of initial claims against the unemployment rate – one might have expected an unemployment rate of just over 8% … not 7.8%
Looking forward to this Friday’s unemployment rate … based on the 4-week moving average of initial claims … the unemployment rate should pop back to at least 7.9% … maybe back over over 8%.
That is, unless Welch is right and the BLS is cookin’ the books.
I guess when the announcement went out that”only essential Federal employees need report”, the folks at the BLS rolled over and went back to sleep.
According to the WSJ …
“… government statisticians and others may not be able complete the preparation of the jobs report before scheduled release time later this week.due to the weather and associated power outages and transportation disruptions.”
Why do I not find this surprising?
Memo to BLS: Get your stupid butts to the office, order a stack of pizzas, and crank until the gov’t emergency generators stop cranking power to your computers.
Somebody pass to the word to Jack Welch, ok?
I though the BLS might find some old time religion – or at least hire a new stats guy – since they got hammered on the incredible 7.8% unemployment number.
Not so.
And, the BLS streak — understating initial claims – continued.
Now we’re up to at least 25 election season weeks in a row that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on today’s BLS report, the number for the week ending October 13 was revised upward from 388,000 to 392,000 … making this week’s headline look 4,000 better.
Glad the election is only 12 days away.
Wanna bet that the BLS makes a post-election change to their methodology?
Last week, Team Obama was crowing about the huge drop in initial unemployment claims … proof poitive that the recovery was gaining steam.
They failed to mention the fact that the state of California sat on a pile of claims … making the numbers look better than they really were.
Well, as Rev. Wright would say, the chickens have come home to roost.
According to the BLS: “In the week ending October 13, the advance figure for seasonally adjusted initial claims was 388,000, an increase of 46,000 from the previous week’s revised figure of 342,000.”
Oops.
Headline: “Jobless claims increase 46,000”
Not exactly proof positive of an economy gaining steam.
My bet, Team Obama emphasizes that claims are overstated because of California.
Too bad.
* * * * *
And, yes … the BLS streak — understating initial claims – continued.
Now we’re up to at least 23 election season weeks in a row that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on today’s BLS report, the number for the week ending October 6 was revised upward from 339,000 to 342,000.
C’mon guys … get it right already.
Obscured by the headline unemployment numbers is an oft-overlooked stat – average hours worked
In rough numbers, average weekly hours worked has declined by roughly 1/2 hour … to 41.5 hours per week.
Couple of interesting aspects to the number …
First, it’s greater than 40 – a standard 5 days – 8 hours work week … suggesting that firms are still using overtime to meet capacity needs rather than hiring … or, folks are working multiple jobs … maybe, 2 part-time jobs.
Second, while 1/2 hour doesn’t sound like much … it translates to over 600,000 full-time equivalent positions, i.e. has the economic impact of pulling more than a half-million FTE workers out of jobs.
The BLS would morph into a punch line if the stakes weren’t so high.
Let’s do the easy part first.
Now we’re up to at least 22 election season weeks in a row that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on Thursday’s BLS report, the number for the week ending Sept. 29 was revised upward from 367,000 to 369,000.
I’ll complain to the BLS Commish when President Obama appoints one.
see the HFs post: BLS Commissioner’s post vacant since January
* * * * *
Bigger Issue this Week
This week, the BLS reported spectacularly good news … claims down 30,000 (after revising last week’s claims up).
While the BLS report failed to mention the point, somewhere between 15,000 and 25,000 claims from California weren’t processed in time to be included.
Say what?
Business Insider did a nice job decoding the situation:
Some of the jobless claims in one large state–California–were not included in the claims reported to the Department of Labor this week.
When a state’s jobless claims bureau is short-staffed, sometimes the state does not process all of the claims that came in during the week in time to get them to the DOL.
Our source [at the BLS] believes that this is what happened this week.
The California claims that were not processed in time to get into this week’s jobless report will appear in future reports, most likely next week’s or the following week’s.
In other words, those reports might be modestly higher than expected.
Our source believes that the number of California claims that were not processed totaled about 15,000-25,000.
Thus, if one were to “normalize” the overall not-seasonally-adjusted jobless claims number, it would increase by about 15,000-25,000.
This week’s “normalized” jobless claims number, therefore, would be about 355,000-365,000, not the 339,000 that was reported.
Are you kidding me?
And, Business Insider missed a key line in the BLS report:
“The largest increases in initial claims for the week ending September 29 were in New York (+2,764) and California (+2,069)”
So, the missing California claims may be even higher … if the missing regions kept pace with the rest of the state
This is getting silly.
The BLS is an independent organization that just reports the facts, right?
Former GOP administration insiders are coming to the BLS’ defense, testifying that the number crunchers are innocent as babies.
So, why should anybody be suspicious just because the “household survey” is giving answers that conflict with the “establishment survey” and is reporting job gains greater than in any other month for the past 30 or 40 years?
Here are four documented reasons to be skeptical:
1. The administration has used bullying tactics with outside pollsters – specifically Gallup
Recently, Team Obama didn’t like Gallup’s polling numbers. So campaign chief Axlerod called them to provide some statistical counseling, and and Attorney General Holder launched a DOJ investigation of Gallup’s human resource practices. Suddenly, Gallup’s poll numbers turned more favorable to the President, including a 1-day 12 point improvement in Obama’s approval rating. Coincidence? Source
2. The administration has been bullying defense contractors to violate Federal employment laws.
ABC is reporting that the White House has told defense contractors to not issue layoff notices until after the election. They even went as far as to offer to pay for any legal fees associated with their violating the law by not giving employees proper notice. Specifically, “defense contractor Lockheed Martin heeded a request from the White House – one with political overtones – and announced it will not issue layoff notices to thousands of employees just days before the November presidential election.” Source
3. Obama has used bullying tactics with other “independent government agencies – specifically the CBO.
The Congressional Budget Office is supposed to be strictly objective, and completely detached from the Administration. But, during the ObamaCare debate, when the CBO numbers weren’t looking favorable, the President ordered CBO director Doug Elmendorf to the White House for counseling. The next week, the CBO revised its numbers. The new estimates were more favorable towards ObamaCare. Another coincidence? click for news report
4. The BLS has a recent track record of questionable numbers.
Most important, for at least the last 22 election season weeks, the same BLS that reports the unemployment statistics has systematically underreported weekly initial unemployment claims by an average of roughly 1% – about 3,000 claims per week – and then revised the estimates up the next week.
Why is the preliminary under-reporting a problem?
Because each week’s “headline” number of changes in unemployment claims is derived by taking the current week’s preliminary number and comparing it to the prior week’s revised number.
For example, in the week ending September 22, the preliminary number (367,000) was compared to September 15th’s revised number (363,000) and and 4,000 drop in unemployment claims was reported. The September 15 preliminary number – the basis for the September 15 report — was 359,000. So, comparing preliminary estimates for the two weeks, unemployment claims increased by 8,000 not 4,000. And, based on the past 22 weeks of initial underreporting, that number is likely to swell when the September 22 number is revised – most certainly upwards.
* * * * *
My point: the Administration has demonstrated a willingness to bully supposedly independent groups, both in and out of government.
And, the BLS has exhibited some curious statistical reporting.
Still believe the latest unemployment report?
Here’s some more conflicting data for you.
The BLS has been reporting unemployment claims pretty level for the year … but increasing lately.
Defying gravity (and logic), the unemployment rate has going down … an inverse relationship.
Hmmm.
Magic?
Yep, the BLS announced this weeks initial unemployment claims, and you know what?
They revised last week’s headline number up.
Now we’re up to 81 out of 82 weeks — and, at least 22 election season weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on Thursday’s BLS report, the number for the week ending Sept. 15 was revised upward from 359,000 to 363,000.
In itself, the 4,000 isn’t a big deal.
But, in context it is
Again, I ask: statistical bias or political bias?
I’m now starting to conclude the latter.
The BLS has plenty of statisticians on payroll … and this is an elementary stats problem
* * * * * *
Let’s try a new way of reporting … here’s a picture.
Note that the preliminary estimate (the blue line) is ALWAYS low … by a couple of thousand.
Hint to BLS: just add 2k or 3k … or .8% to your prelim forecast !
… certainly won’t be today
Unbelievable, they did it again this week.
I promise that I’ll stop writing about BLS reporting bias when the streak ends, but …
Now we’re up to 80 out of 81 weeks — and, at least 21 election season weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on Thursday’s BLS report, the number for the week ending Sept. 22 was revised upward from 382,000 to 385,000.
In itself, the 2,000 isn’t a big deal.
But, in context it is
Again, I ask: statistical bias or political bias?
I’m now starting to conclude the latter.
The BLS has plenty of statisticians on payroll … and this is an elementary stats problem
* * * * * *
Let’s try a new way of reporting … here’s a picture.
Note that the preliminary estimate (the blue line) is ALWAYS low … by a couple of thousand.
Hint to BLS: just add 2k or 3k … or .8% to your prelim forecast !
* * * * *
Here are the nums … but the picture says it all.
Yesterday’s headline’s trumpeted a 3,000 drop in initial unemployment claims.
Hooray. Right?
Of course not, the BLS revised last week’s number up by 3.000 so that it could report this week as being down by 3,000.
Huh?
Now we’re up to 79 out of 80 weeks — and, at least 20 election season weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on Thursday’s BLS report, the number for the week ending Sept. 8 was revised upward from 382,000 to 385,000.
In itself, the 3,000 isn’t a big deal.
But, in context it is
Again, I ask: statistical bias or political bias?
If the former: fix it already, BLS.
Hint to BLS: just add 2k or 3k … or .8% to your prelim forecast !
I promise that I’ll stop writing about BLS reporting bias when the streak ends.
I promise that I’ll stop writing about BLS reporting bias when the streak ends.
Now we’re up to 78 out of 79 weeks — and, at least 19 election season weeks in a row — that the BLS’s “headline number” has under-reported the number of initial unemployment claims … and cast the jobs situation as brighter than it really is.
Based on Thursday’s BLS report, the number for the week ending Sept. 1 was revised upward from 365,000 to 367,000.
In itself, the 2,000 isn’t a big deal.
But, in context it is
Again, I ask: statistical bias or political bias?
If the former: fix it already, BLS.
Hint to BLS: just add 2k or 3k … or .8% to your prelim forecast !
* * * * *
And, oh yeah, the initial jobless claims increased by 15,000 … above the consensus estimates … and consistent with an unemployment rate higher than 8.1%.
