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Was the Employment Number Fudged?

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October 06, 2012 – Comments (10)

Conspiracy theories aside, the employment number we got on Friday morning was quite a head scratcher. On the surface, it took 873,000 people finding employment to lower the unemployment rate from 8.1% to 7.8%. But there was only 114,000 jobs added during the month. Which 1983 aside, was the biggest surge we've seen in decades. 

Now what's ruffling feathers is that the Bureau of Labor and Statistics  (under the Labor Department) fall under the executive command of the White House, who took a huge hit during the debates Wednesday night, and one month out we get this huge surge in employment. Coincidence? I doubt it.

Also working in the employment number's favor was that they conveniently scrubbed 1,200,000 people from the work force because they have been looking for a job for too long! Now in an economy where GDP continues to drop off and stands at 1.3%, it is understandable why it could take more than six months to find a job. But these people (1.2 million jobless individuals) were scrubbed from being considered in the employment number. 

Personally, I think the jobless number is a farce, I've always believed it was a farce because who they consider part of the employment number (actively looking for less than six months). It just doesn't show the whole picture. But when you get such huge discrepancies like the one I described above, lets admit it, the numbers don't add up, and they should be called into question, particularly since a Romney victory in November results in the traditional lay-off of labor officials (a large percentage of which are active Obama donors) tied directly to the Obama administration. So it's not a surprise why there might be a conflict of interest. 

Here's the rest of the article

10 Comments – Post Your Own

#1) On October 06, 2012 at 3:14 PM, wolfman225 (65.25) wrote:

What confuses me about these numbers is the fact that we've been told for years and years that the economy needs to add at least 250,000 jobs per month just to keep up with the population numbers, and that it would take a minimum of 350,000 new jobs a month to move the unemployment number as little as 0.1%.

They claim that over 800,000 people got work, mostly part-time, according to the Household Survey (widely acknowledged as the smaller and more volatile sample of the two used) in the  month of September.  That same survey reported that over 300,000 people left the workforce in the month of August.  They expect us to believe that our current economy produced a swing of over 1.1M jobs in 30 days?

Also suspicious that the U6 number remains unchanged.  I would think that a drop of half a percentage point in the reported unemployment would at least be reflected in the rest of the UE numbers.

Also mentioned in the article is the scrubbing of over 1 million people from the workforce calculation.  If UE was calculated with the same workforce numbers as in January, the unemployment number would be 8.4%, an increase from 8.3% in January of this year.

Oddly, the economists whose business it is to follow and prognosticate on these statistics were forecasting job growth of 115,000, with a corresponding rise in the unemployment rate of 0.1%.  Strange that they would be so accurate on the one and so far off the other.

Add in the fact that this is the same Dept. of Labor that is joining with the administration to instruct defense contractors and other businesses involved in the defense industry to ignore compliance with the WARN Act in order to prevent the announcements of layoffs before the election and you have much reason to wonder, as I do, at the seemingly unbelievable coincidence of these numbers being what they are just when the Obama administration suffers it's most public humiliation since the mid-term elections of 2010.

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#2) On October 06, 2012 at 3:43 PM, DoctorLewis4 (< 20) wrote:

The Chicago boys and the tooth fairy changed these numbers.  The plan was hatched by Obama's father 50 years ago.  Despite the fact that two Bush treasury officials said the numbers were ligit and there was absolutely no way to fudge them  - we know better! 

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#3) On October 06, 2012 at 4:37 PM, wolfman225 (65.25) wrote:

Of course there's a way to "fudge" the numbers.  By adjusting the calculation to reflect a smaller labor force and reducing the official tally of "available jobs".

We aren't stating it as fact they did, it seems a little too convenient as far as the timing of the report goes, as well as the change being as dramatic as it is with such a disparity of figures from the norm.

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#4) On October 07, 2012 at 1:47 AM, ajm101 (32.78) wrote:

This is a perfect illustration of how CAPS has turned into a fever swamp.  Top posts used to get 30-50 points, but nutty stuff like this drives off reasonable people.  Congrats on killing the goose that laid the golden egg, MF.

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#5) On October 07, 2012 at 2:09 AM, wolfman225 (65.25) wrote:

^What?  You don't think that a Presidential election has any effect on financial issues and stocks?  Not to mention even the possibility that any Presidential administration could concievably be guilty of massaging data in order to bolster their chances of retaining their grip on power.

Remember, few, if any thought that the financial institutions were massaging their numbers either.  Until it all fell apart.

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#6) On October 07, 2012 at 3:01 AM, ETFsRule (99.94) wrote:

Upon a closer examination of the numbers, it appears that the numbers are NOT fudged. Here is the most relevant link:

http://research.stlouisfed.org/fred2/graph/?g=bxc

"On the surface, it took 873,000 people finding employment to lower the unemployment rate from 8.1% to 7.8%"

Yes, and that is exactly what happened. While this may sound like an unusually high number, my link above shows that this same exact spike occurs EVERY SEPTEMBER! So, this clearly seems to represent some predictable type of seasonal, part-time employment.

I didn't see anyone spouting these conspiracy theories over the September 2010 or September 2011 numbers, which showed similar increases.

"But there was only 114,000 jobs added during the month."

That is non-farm, payroll employment, which is an entirely different data series than the 873,000 number that you mentioned earlier.

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#7) On October 07, 2012 at 3:02 AM, ETFsRule (99.94) wrote:

.

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#8) On October 07, 2012 at 9:02 AM, TMFMorgan (< 20) wrote:

Funny how an 800k gain in the household survey sparks shouts of conspiracy and fuding the numbers, but the 400k decline in August and July didn't seem to bother anyone. When the numbers are abnormally low, it's a sign the economy is crashing. When they're abnormally high, it's a conspircy to cook the books. Seems only a minority of the country can admit that the household survey is always, always, always wildly volatile. 

Also, when you say 1.2 million people were scrubbed from the laborforce, what are you talking about? The work force *increased* by 400k last month, from 154.6 million to 155 million:

http://research.stlouisfed.org/fred2/data/CLF16OV.txt 

 

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#9) On October 07, 2012 at 11:18 AM, wolfman225 (65.25) wrote:

ETFsRule & TMFMorgan--  Just commenting on the timing of such an unusual reversal.  Reportedly, the claimed increase of 800,000+ in employment in the household survey is the largest in 29yrs.  Forgive me, but it's hard to believe that such a number, last seen during the rebound from the '81-'82 recession, would be produced by the current economic atmosphere.

And, as I understand it, most of the job inceases claimed are as a result of those who are either "working from home" or those who have started their own businesses.  As you said, the household survey is volatile, sometimes wildly so, that's why the number usually reported is the non-farm payroll employer numbers.

That's the point I was referencing.  To this layman, we've always been fed the unemployment numbers by the latter measure and we've been told that it takes at least 250,000 new jobs gains per month, on average, to maintain a constant emmployment level, while it take in excess of 350,000 jobs gained per month to affect the unemployment rate.  When the professional analysts' projections are at such odds with themselves it strikes me as odd.  They were almost exactly correct in the number of non-farm jobs gained but they missed the projection of the rate by nearly half a percent?  As I said, it's hard for the layman to understand the apparent disconnect.

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#10) On October 07, 2012 at 11:34 AM, TMFMorgan (< 20) wrote:

^ It was the largest in 29 years, but just barely the second largest in the last 9 months. The household survey showed 873k jobs were created in September. It also showed 847k jobs were created last December (no one called it an Obama conspiracy back then beacuse we weren't a month away from the election).

And for what it's worth it also showed 400k jobs were lost last June, 600k were lost the previous December, and 200k were lost in April. Again, it's really volatile. Any survey of 50k households in a country with 115,000,000 households will be. 

(Though it's worth noting that the 9-month average household survey figure is statistically the same as the 9-month average business survey figure. The numbers converage over time.)

I agree that the unemployment rate is one of most useless jobs statistics available, and sadly it's the one most people latch on to.  

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