Tag Archives: Seasonal adjustment

Lied To (Again)

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Yesterday The New York Post posted an article about the Labor Department‘s December jobs report. I am probably not the only one who wondered why the jobs added number was lower than expected (I see signs of economic recovery all around me–new shops, new construction, formerly unemployed people going back to work, people getting bonuses, etc.). Well, it seems that there was more to the numbers than I thought.

The article reports:

But the number was kept artificially low by a seasonal adjustment that wasn’t comparable to the one done a year earlier, in December 2016.

And it’s unusual for one December’s adjustment to be so different from the previous December.

If the adjustments had been consistent, last Friday’s number would have shown growth of another 133,000. Add the growth that was announced (148,000 jobs) and the seasonal adjustment difference (133,000) and this December’s growth would have been a very, very healthy 281,000 jobs.

How to lie with statistics.

It gets worse:

There was another adjustment that made Friday’s job number look worse than it would have been.

In the December figure released last Friday, the government deducted 38,000 jobs that it thinks were lost but can’t prove were lost because they happened inside very small companies.

A year earlier, in December 2016, only 17,000 jobs were deducted for this reason.

Again, if Labor has simply remained consistent, December’s jobs gains could have been as high as 300,000.

As I’ve explained many times before, the government’s economic statistics are not expected to be completely accurate the first time they are announced — even though Wall Street and the media treat them like they are.

That’s why the government does numerous revisions.

I guess the only numbers we can actually believe are the ones in the final revision!

Looking Behind The Obvious Numbers

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The jobs report came out today. John Hinderaker at Power Line posted an article about the numbers reminding us that what we read in the media may not be the whole story.

Some of the facts he points out:

* The number of people aged 16 years and above who are not in the labor force increased by 111,000 this past month. While a somewhat lower increase than in months past, it still outpaces forecasted retirements.

* The number of people taking part-time jobs because they cannot find full-time work increased by 275,000 this past month.

* In fact, the number of people employed full-time (according to the household survey that also counts self-employed) declined by 523,000 while the number of part-time workers increased by 799,000 (which includes those who wanted part-time and those who wanted full-time but could only find part-time). These estimates are seasonally adjusted to account for the normal increase in June part-time work.

* The U-6 unemployment rate (the broadest measure of unemployment) remains virtually unchanged at 12.1 percent. U-6 includes those people who are discouraged, only occasionally trying to find work, and those employed part-time for economic reasons.

The article also reminds us that both incomes and economic growth remain flat. It seems as if the only thing growing in this economy is the Stock Market (which the government is currently propping up).

Economic Recovery????

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Fox Business reported today that the weekly jobless claims jumped to 368,000 this week.

The article reports:

Initial claims for state unemployment benefits surged 68,000 to a seasonally adjusted 368,000, the Labor Department said on Thursday. That was the largest weekly increase since November 2012. Claims for the prior week were revised to show 2,000 more applications received than previously reported.

No explanation has been given for the jump. The claims report also showed an increase in the number of people collecting benefits. The number jumped 40,000 to 2.79 million in the week ended Nov. 30.

On Sunday I posted an article (rightwinggranny.com) questioning the accuracy of the unemployment numbers we are being given. It is interesting to compare the actual numbers with the numbers being given out during the previous week.

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The Week After

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Investors.com posted an article yesterday listing the things we have learned about the economy since last week’s election. It’s not a pretty list.

This is a chart from the article:

Some of the highlights are lower earnings, increased poverty, jobless claims increasing, inflation creeping up, coal plants closing, food stamp enrollment climbing rapidly and small banks going out of business.

What a mess President Obama has inherited from his predecessor.

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Be Careful What You Believe Between Now And the Presidential Election

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Yesterday Fox Business posted an article about the jobless claims data reported this week.

The article reports:

A sharp drop in the number of weekly jobless claims filed last week was caused by the failure of one large state to report all of its claims, a Labor Department spokesman confirmed to FOX Business.

Initial jobless claims, which are a measure of the number of people recently laid off, fell by 30,000 to a seasonally adjusted 339,000, the lowest level in more than four years.

But the Labor Department spokesman said the numbers were skewed by one large state that underreported its data. The spokesman declined to identify the state, but economists believe California is the only state large enough to have such a significant impact on the overall numbers.

Evidently, the state that did not report their numbers forgot to include that stockpile of unprocessed claims in their tally for this week (which is the first week of a new calendar quarter),

This is the equivalent of saying all of your bills are paid because you are haven’t gotten to the pile of bills you left on the kitchen table. We are truly in the silly season and need to discount at least ninety percent of what we read or hear from the media. Just for the record, the number will be revised upward, but at a time when no one is paying attention.

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The Unemployment Numbers

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The truth behind the unemployment numbers from the Bureau of Labor Statistics:

Labor Force Statistics from the Current Population Survey

 

The bottom line here is simple. The only reason the unemployment number is below 9 percent is that the number of people in the labor force is less than it has been. There are two ways to lower the unemployment rate–employ more people or remove people from the labor force so that the percentage of unemployed people is lower. As you can see, the number of people in the labor force is decreasing–not increasing. We are moving in the wrong direction.
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