Rubbish Unemployment Numbers from the Bureau of Lies & Statistics

Discussion in 'Wall St. News' started by ByLoSellHi, Jul 6, 2009.

  1. Rubbish Unemployment Numbers from the Bureau of Lies & Statistics

    De Omnibus Dubitandum
    Matthew Collins, A-Letter Editor

    Among all the wonderful (but useless) economic data we got this week was a fresh report on the jobless numbers from the Bureau of Labor Statistics.

    Before we start, it’s worth noting that the first unemployment survey in America was conducted for a purpose…

    The officials in charge wanted to prove that our employment situation “wasn’t that bad”. That plenty of Americans were employed.

    It’s just worth noting the suspicious origins of America’s government-subsidized unemployment numbers…because they seem to be manipulating the data toward the same goal today…
    The “Birth / Death” Model.

    So at the core of the BLS’ unemployment statistics are a host of assumptions…

    For one, they assume that many people who can’t find a job don’t count as “unemployed.” Anyone working part-time at a restaurant while he searches for a career is likewise, not unemployed.

    Essentially, you only count as “unemployed” if you were laid off at no fault of your own – some time in the last six months – and you don’t take a part-time job to pay the bills, and you don’t stop looking for any period over a week or two.

    But those are just the real statistics.

    Behind them is the “Birth / Death” Model. Like Owner-Equivalent Rent (OER) in the CPI, this number is pure imagination…with no bearing on reality, its ultimate purpose is to allow the BLS to greatly skew their statistics, putting together “hard math” that backs up whatever party line they choose.

    The Birth / Death Model was intended to measure changes in employment at the micro-level.

    If Tom’s hardware shop went out of business – for example – then three or four people would be out of work. Not a large enough outfit for the BLS to keep tabs on, but it’s definitely small enough to follow the broad markets.

    So – for example – if there were a bunch of small mortgage shops that flipped subprime mortgages (which there were)…and a subprime bubble collapsed…then the “Birth / Death” adjustments could be used to show that broad economic shift, even though it was carried out by a drove of small, nameless five-man shops in nowheresville, USA.

    Only problem is; that’s not what happened.


    And it has ever since.

    A total of 800,000 jobs were added through this mysterious black box just in the last year.

    Is there any reason for this? Any factual basis? None has been provided, and it’s not likely that any will.

    But you don’t need the BLS to tell you their justification. Instead, it’s plain as day…

    BLS reported 467,000 jobs lost in the last month. A horrible, giant number…but it’s still softer than reality. Because Birth / Death adjusted the number upward by 185,000 jobs.

    Again, they offer no evidence to back up this assumption. But instead of reporting total jobs lost as over 650,000, they got to squeeze it under a half-million.

    Which is good, because the Obama administration’s existing unemployment estimates are already painfully off. In fact, they’re almost funny at this point (just take a look at the chart below).


    So the lying definitely staves off panic…it preserves whatever shred of economic credibility Obama’s administration still has in the mainstream…and it helps the “green shoot” story.

    But it doesn’t bring you or I any closer to the truth…so it doesn’t help our understanding of the economy…and it doesn’t stand to help our portfolios at all…