Why the latest Unemployment Rate numbers are BS and MEANINGLESS (w/pictures)

[Roland99]

(Numbers from bls.gov)

The monthly average of new jobs created is just barely above the equilibrium point (of population growth).

This is further evidenced by looking at the Labor Force Participation Rate (LFPR... BLS Series ID LNS11300000)


Look at how flat that line is for the last year (note that the scale is rather 'zoomed in' due to the short range of dates involved)




For comparison, here's the LFPR from 1996-Present






And, oh, btw, just look at how M3 growth has skyrocketed:
http://www.shadowstats.com/cgi-bin/sgs/data

Looks like the gov't is trying to buy its way to prosperity using the Federal Reserve as a credit card.

[Pharaoh]

1. All their numbers are BS

They just make them up these days, no need to deal with pesky facts!

[still_one]

2. That is the dirty little secret no one talks about

Compare that to the number of new jobs created under Clinton

They cannot even break even with new workers coming into the market

[WCGreen]

5. CNBC was going crazy yesterday when they released these

numbers...

They were saying we are the most advanced economy in the world... How can they get these numbers so wrong, every month...

[Roland99]

6. Even *if* we were nearing full employment, that's not really a good thing.

That only increases pressure on inflation.

[still_one]

7. Bloomberg was doing the same hyping

What I find interesting, if thing are going so well as they are pushing, how come these so-called analysts are also saying that the fed needs to lower interest rates. If the economy was REALLY doing so well, why would the fed need to lower interest rates

ARE PEOPLE THAT STUPID?

[WCGreen]

27. Lower rates mean lower interest rates which means higher stock

prices...

I firmly believe that there is actually little wealth being created...

It is just jumping from one investment to another...

Bonds go up, stocks go down...

Oil goes up, stocks go down...

Gold goes down, stocks go up....

[misternormal]

3. The unemployment numbers are projection...

... mixed with fabrication...

When one loses one's job, and collects unemployment, one is counted as being unemployed... When the unemployment runs out, and one is not hired, that person is dropped from the unemployment roles...

The number is gone. So, saying that X number of jobs are created because the unemployment numbers go down is a joke.

[Roland99]

4. Actually, the unemployment rate is based on a household survey, NOT benefits.

http://www.shadowstats.com/cgi-bin/sgs/article/id=341

Household Survey (also Current Population Survey) -- The household survey generates the unemployment rate from a statistically designed monthly sampling of roughly 60,000 households. Other surveys, such as the annual poverty survey, often are piggybacked on the employment questions. The survey measures the number of people who have jobs.

Payroll Survey (also Establishment or Current Employment Statistics Survey) -- The payroll survey generates an estimate of the number of nonfarm jobs in the U.S. economy, based on a monthly non-random sampling of payroll tax filings of about 160,000 U.S. corporations and government agencies. The survey measures the number of jobs (some individuals hold more than one job).

The household survey is conducted during the week that includes the 12th of the month. The payroll survey is conducted as of the payroll period that includes the 12th of the month. Other than for seasonal factors, the household survey gets revised only with series or population redefinition. The payroll series is revised for two months following the initial release and then again in an annual benchmark revision.

Where the household survey includes farm workers, the self-employed and workers in private homes, the payroll survey does not. The payroll survey counts jobs, making no adjustment for multiple jobholders. Yet, adjusting for all differences, the BLS never has been able to reconcile the two series within one million jobs....

[Nikia]

22. Isn't the household survey by phone?

Wouldn't unemployed people be less likely to have land lines than those with jobs. Wouldn't those who are unemployed be lesslikely to answer the phone for fear of bill collectors than people with jobs?

[Roland99]

24. That might be part of the reason why John Williams has no faith in that survey.

[Roland99]

8. Edited OP to include LFPR graph from 1996-Present

You can really see the lack of job growth in the "recovery" now.

[porphyrian]

9. Kick for the visual aids. - n/t

[BlueManDude]

10. Inflation numbers are BS too. Health care, housing and education

are killing middle income people.

[Roland99]

11. Here's some info behind the REAL inflation numbers >>>>>>>>

"GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE SUSPECTED BUT WERE AFRAID TO ASK!"
A Series Authored by Walter J. "John" Williams
"The Consumer Price Index" (Part Four in a Series of Five)
October 1, 2006 Update
(September 22, 2004 Original)
http://www.shadowstats.com/cgi-bin/sgs/article/id=343

Traditional inflation rates can be estimated by adding 7.0% to the CPI-U annual growth rate (3.8% +7.0% = 10.8% as of August 2006) or by adding 7.4% to the C-CPI-U rate (3.4% + 7.4% = 10.8% as of August 2006).

And an interview w/John Williams
http://www.weedenco.com/welling/Downloads/2006/0804welling022106.pdf

[FloridaPat]

12. I find it amazing that with no inflation, everything I buy is way up in

price.20-30%. So just imagine what the real unemployment rate is. I was unemployed for over 2 years. Finally got a job this year. A lot of unemployed people have had to take jobs outside their field or for much lower wages. Or become self-employed. I think * started counting all those Ebay sellers as employed a year or so ago.

The repubs haven't told the truth about anything in 6 years. They are running the country into the ground so they can amass riches beyond understanding for themselves and buddies. I really like that shadowstats website.

As for the M3 growth - remember Germany before WW2 when the money was worthless.

[Rosemary2205]

13. Do we even dare bring up the QUALITY of those new jobs?

I see that as a bigger problem than the unemployment rate at the moment. The trend of forcing wages low, lower, lowest is a huge problem. IMHO.

[Roland99]

14. All in the "service" industries. Mfg jobs dropped by 60,000

http://today.reuters.com/news/articlenews.aspx?type=businessNews&storyID=2006-11-03T221011Z_01_N02359086_RTRUKOC_0_US-ECONOMY-JOBS.xml&pageNumber=2&imageid=&cap=&sz=13&WTModLoc=NewsArt-C1-ArticlePage2

The business survey showed most of the new hiring in October was in service industries, where 152,000 new jobs were created, while goods-producing industries shed 60,000 jobs.

Notice how that paragraph is buried at the very end of a 3-page article?

[54anickel]

18. They usually tend to bury the important facts. Where did the new jobs come from?

http://abcnews.go.com/Business/MarketTalk/story?id=2626600&page=1

snip>

Where did the new jobs come from?

The long-term trends are apparent in this month's report: Jobs where people make things are going away (-60,000) while jobs where people do things are seeing solid growth (+152,000).

The specific helps give detail to that picture.


Continued (see, the good stuff's on the next page in this one too!)


Losing jobs: residential construction (-30,700), motor vehicles and parts (-14,700), plastics and rubber products (-13,800).

Adding workers: temporary help (+15,000), health care (+22,500), restaurants and bars (+26,700) and local governments (+30,100).

How much does this matter? This is important. The jobs report is arguably one of the most important economic indicators out there — and it's easy to understand.

That said, the recent trend of offering big revisions to the monthly numbers is putting some people in a dour mood on this report.

There might be a growing chorus of voices asking for changes in the way the BLS calculates the numbers.

:hi:

[Roland99]

19. Yeah, the revisions have been HUGE lately.

[Darkhawk32]

15. Big time K&R! n/t

[The Count]

16. Didn't BFEE change the way they even compute these back in 2001?

When they kept misreporting the date of Bush's recession - trying to place it one year earlier - so as to blame Clinton - I also remember reading that they changed the rules for measuring unemployment - so measuring againat prior levels is irrelevant from the start.

[Roland99]

17. See post #4. The methodology was changed under Clinton

http://www.shadowstats.com/cgi-bin/sgs/article/id=341

[sandnsea]

20. Back in the 80's

They changed unemployment methods too. They did something with the military and I partly don't remember and partly don't know if it was a fair change or not. I thought maybe you'd know, since you seem to have this stuff down pretty good. What would our unemployment rate be today if it were counted the same as it was in 1980.

Also, when they do the household survey and run across somebody working as part of a welfare-to-work program, how are they counted? Because that's not a 'market' job, that's the government paying business to hire people.

[Roland99]

21. Hmm...good questions. Don't know the answers.

[Roland99]

23. We're on the Longest Downward/Flat-Line Trend in *45 Years* !!!

Labor Force Participation Rate (1948 - Present)

[mom cat]

25. Thanks for the info, esp the SGS estimate of the CPI. That is much more

like it. They must include the essentials of life!

[Roland99]

26. Don't ya love how easily they dismiss Food/Energy costs?

[mom cat]

28. Well, those are not such a big deal if you earn $200,00+ a year.

And the poor people like the rest of us do not matter to the overlords.

[Roland99]

29. You obviously are just looking for a handout and want to live off the gov't

:sarcasm:

[mom cat]

30. Silly me. Thinking the cost of food matters!

:sarcasm: