Fake jobs stats prop up sinking prez popularity

Submitted by: Donald Hank

http://beforeitsnews.com/story/1912/959/Our_Phenomenal_Jobs_Growth_Makes_No_Sense.html

Our Phenomenal Jobs Growth Makes No Sense

Monday, March 19, 2012 5:04

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Dave Cohen ~ Decline of the Empire

Thank God there are a few people—very few—who are not willing to swallow the government's jobs propaganda hook, line and sinker. This is an election year, so we have every reason to believe that the nonsense we've been fed lately is not going to stop anytime soon. That's not to say that official statistics emanating from the Bureau of Labor Statistics (BLS) are unduly influenced by political considerations. That's not how things work. More on that below.

Let's start out with a feckless CNN Money story called Jobless numbers defy economic theory (hat tip, The Downward Spiral).

Economists are scratching their heads over the recent failure of a textbook economic law: In order for the unemployment rate to be where it is today, our economy should be growing faster than it is.
FORTUNE — Lately the improving jobs picture has stumped many Wall Street economists, who say the labor market seems to be doing better than what the pace of economic growth would suggest.
Goldman Sachs and a few other Wall Street firms forecast real GDP growth of less than 2% this quarter. And yet, the unemployment rate in January dropped to 8.3% — the lowest level in three years. The decline goes against Okun's Law, which economists have historically relied on to forecast what the job market might look like given how quickly (or slowly) the economy is growing. As a rule of thumb, Okun holds that year-on-year economic growth of 2 percentage points above the trend — widely considered 2.5% — is needed to lower unemployment by one point. And vice versa.
Since the Great Recession, the unemployment rate has defied the law...

In short, Okun's conjecture is not "a law" really, it's more like a rule of thumb. And since late 2007, it's been a complete joke. The "official" unemployment rate, which is mostly smoke and mirrors, has not been related to GDP growth, which is also mostly smoke and mirrors. Imagine that! Two bullshit variables do not demonstrate a reliable, consistent relationship to each other. Will wonders never cease?
This was my favorite quote from CNN Money.

It could be that today's GDP statistics are wrong.

That's an excellent start.

The economy might actually be growing much faster than we think, which wouldn't be too surprising since it's not unusual for growth statistics to get revised years later as economic data comes in.

Oh, no!

In a research note to clients on Monday, JP Morgan economist James Glassman pointed to the 2008-2009 recession in which GDP was significantly revised downward last year.

I want bang my head against the wall! Doesn't anybody spot the trend here? Bad numbers in the past are revised downward years later to ease our pain. Bad numbers in the present are never fully acknowledged. These numbers will be revised downward years from now to spare us the agony of admitting we're up the creek without a paddle. Well, OK, never-ending human bullshit is not a good reason to beat yourself up. Let's press on.
Gallup is having trouble believing the BLS jobs numbers (hat tip, Mish). I'll quote from Unemployment Numbers Suggest U.S. Economic Boom, or Not.

A careful look at the government's unadjusted household unemployment data shows a stunning 740,000 jobs added to the economy in February — three times the 227,000 reported based on the establishment payroll survey.
If this is economic reality, then the underlying economy must be growing much faster than most Americans currently believe. If the U.S. economy is surging, and jobs increased at the rate of three-quarters of a million last month, why haven't we heard a lot more about it? And, given a rapidly expanding economy, how can Gallup's nearly 30,000 random interviews with Americans across the nation show a significant increase in the unemployment rate?

The latest Gallup unemployment data, released this morning. Underemployment, which includes those working part-time who want full-time work, is 18.6%, down from 19.1% in February. The Gallup not seasonally adjusted (NSA) unemployment rate continues to run higher than both the comparable BLS number, and the seasonally adjusted "official" headline number, which stood at 8.3% in February.

You can read the Gallup story for the details, but I've highlighted the interesting question. If the U.S. economy is surging, why haven't we heard more about it? Why have Americans failed to notice that there is a miracle occurring in their midst?
If you doubt the power of the BLS seasonal adjustment, this research from market analyst John Hussman should allay your concerns. Hussman is talking about miraculous jobs growth which occurred in January.

To begin, it's useful to understand how the Bureau of Labor Statistics calculated the 243,000 increase in employment that it reported for January. Total non-farm employment in the U.S., before seasonal adjustments, fell by 2,689,000 jobs in January. However, because it's typical for the economy to lose a large number of jobs after the holidays, largely in retail trade, construction, and manufacturing, the BLS estimated that the "normal" seasonal decline in employment should have been 2,932,000 jobs in January.
The difference between the two numbers, of course, was 243,000 jobs, which was reported as an increase in employment. The fact that the size of the seasonal adjustment was more than 12 times the number of reported jobs, and more than 30 times the "beat" in economists' expectations, should provoke at least some hesitation in taking the number at face value.
Notably, the January 2011 and 2012 seasonal adjustment factors (seasonally adjusted payrolls divided by unadjusted payrolls) have been the two largest factors used by the BLS since the 1960's, at 1.0166 and 1.0165, respectively. This compares with a January seasonal factor of 1.0155 a decade ago, and a factor of 1.0152 as recently as 2009. Now, a range of 0.0014 in the seasonal factors for January may not seem like much, until you consider that non-seasonally adjusted payrolls are presently about 130 million jobs, so variation in the seasonal adjustment factor alone amounts to a difference of 182,000 reported jobs.I'm not suggesting there's anything nefarious going on here, it's just that part of what we're seeing here is most likely a statistical artifact of the adjustment process.

No, there's nothing nefarious going on here, which allows me to return to the point I started to make in the introduction. The Obama White House is not telling the BLS what numbers to report. These Democrats are not strongly "suggesting" that the BLS use a seasonal adjustment of 1.0152 instead of some other number which might not have resulted in the "creation" of 243,000 non-farm jobs.
Positive bias is built right into government reports on the economy, which is obviously a political hot button. We can see this bias not only in the distortions introduced by the seasonal adjustment—a statistical artifact of the "adjustment process" according to Hussman—but also in the "birth-death" model, the participation rate, marginally attached or "discouraged" workers, and all the other introduced complexity in BLS reporting.
After all, this is the government, is it not? And isn't the government supposed to be on our side? Isn't the government supposed to be taking care of us? Of course they are, and when the shit hits the fan, there is an undeniable, overwhelming psychological tendency among bureaucrats to spin things so that it looks like the government is doing its job, even when quite obviously they are not doing it. This is all true especially when it was largely the government's past actions which are responsible for the sorry state we find ourselves in today.
So government statistics describing the economy will alway favor whoever is holding power, which happens to be Obama and the Democrats in 2012 (except in the House of Representatives). There's not much we can do about this, but it is also incumbent upon us to see this bullshit for what it is. I hope this post was helpful in that regard.