(2PM EST – promoted by Nightprowlkitty)
The recent unemployment report was a disaster. Another 95,000 jobs vanished, 18,000 jobs after you subtract census workers.
However, the story doesn’t end there. Like most months, the MSM mostly ignored past revisions, or even tried to spin them as something positive.
As part of the employment report, the BLS released the preliminary annual benchmark revision of minus 366,000 payroll jobs.
Disappearing hundreds of thousands of jobs has become a yearly tradition at the Bureau Labor Statistics. Last year the BLS wiped away 902,000 previously reported jobs, another 89,000 jobs in 2008, and another 293,000 jobs in 2007.
All told the BLS has erased 1.65 million reported jobs in the last four years.
That’s more than twice the number of jobs the Obama Administration claims were created this year.
What we’ve seen consistently through this entire Depression is the government reporting employment numbers that often come in higher than feared, only to revise them drastically down weeks or months later when no one is looking.
Most people aren’t aware that Gallup conducts employment surveys too. Their most recent report bodes ill for next month.
The government’s final unemployment report before the midterm elections is based on job market conditions around mid-September.
However, Gallup’s monitoring of job market conditions suggests that there was a sharp increase in the unemployment rate during the last couple of weeks of September…
the sharp increase in the unemployment rate during late September does not bode well for the economy during the fourth quarter, or for holiday sales. In this regard, it is essential that the Federal Reserve and other policymakers not be misled by Friday’s jobs numbers. The jobs picture could be deteriorating more rapidly than the government’s job release suggests.
The “error” in the BLS report is simply a matter of timing. That happens sometimes. Revisions are to be expected, both on the upside and downside.
But what about when revisions only happen in one direction? For instance, the weekly unemployment initial claims reports?
beginning in April, of 2010, continuing through today, there have been 22 out of 23 consecutive upward prior weekly revisions! In other words, the BLS has a definitive mandate to underrepresent the “current” weekly data and to allow it to catch up with reality once it has become “prior”, and thus no longer market moving, when in reality should the BLS present true data it would have likely missed estimates on more than half the occasions it has “beaten” and caused ridiculous market spikes like the one experienced earlier. Furthermore, combining all individual weekly data, demonstrates that the BLS has underrepresented initial claims by roughly 80,000 year to date.
Market moving is part of what we are talking about. No one who trades on Wall Street cares about last week’s initial claims reports. Nor do they care about the monthly reports that are revised 8 months later.
Plus, old revisions don’t make headlines. Thus the general public is never made aware that things really were as bad as they thought they were.
The reason why the monthly employment numbers are inflated is because of the Birth/Death Model. Every month it calculates how many jobs were created via the birth of new businesses.
Does it use a survey to figure this out? No, it uses a mathematical model that doesn’t necessarily have anything to do with reality.
For example, the Birth/Death Model created 990,000 fictional jobs in 2009 in their monthly reports. Later on, 902,000 jobs were revised away.
The BLS just revised away 366,000 jobs for the same time period that the Birth/Death Model created 336,000 fictional jobs.
Revisions aren’t the only way the numbers are fudged.
Jobless numbers are being reduced by simply no longer counting people.
Since 2009, a layoff victim has been more likely to give up looking for work and drop out of the labor force than to find a job, according to a new report from the Roosevelt Institute, meaning employment prospects for the jobless are the worst they have been since the government started keeping track of them.
Since the recession began in December 2007, 4.7 million people have dropped out of the labor force, which means they lost hope of finding work and so quit looking. Even more people would have given up on their job searches had it not been for a dramatic increase in unemployment benefits, which encourage the jobless to keep searching, according to the report’s authors.
Paul Craig Roberts estimates that if unemployment was still calculated the way it was in the 1930’s then the unemployment rate would be far higher than today’s official numbers.
Over a million people dropped out of the labor force in just this past month.
The real problem here is if the government completely loses credibility. That uncertainty will weight heavily on business investment.