Strange Maths? US unemployment numbers described as Contradictory

Cork boy 55

So just a few months away from a general election and good old Obama needs some positive spin. What better way to spin that use the tried and tested method of pretending there are more people at work and unemployment is falling.

No way, he couldn't do that, tin foil hat time, yes its a conspiracy, Or is it

CAN HE SPIN? - YES HE CAN

As soon as ex-General Electric CEO Jack Welch fired off a tweet questioning today's just released "unbelievable jobs numbers," the media went into a frenzy talking about how "conservatives" were launching conspiracy theories. Well, that's handy for the media and the Obama campaign, but it's not just "conservatives" who are confused by a full 0.3% drop in unemployment when only 114k jobs were created.

CNBC is as confused as the rest of us:
Job growth remained tame in September, with the economy creating just 114,000 net new positions though the unemployment rate fell to 7.8 percent, the first time it has been below 8 percent in 43 months.
The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number.
The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions.
On the air, CNBC seemed equally perplexed by the biggest one-time drop in the unemployment rate in 29 years!

Adding to the mystery is the fact that the U-6, the longtime underemployment and unemployment number, remained fixed at a dismal 14.7%.

What this .03% drop means (per Ed Morrissey) is that the number of unemployed people dropped by 456,000 when only 114k jobs were created--well below the monthly average, and below population growth. Where did 342k people go to lower the number so dramatically just 31 days before a presidential election? Did they retire, leave the planet, die of old age in the unemployment office?
Moreover, just 30 days before the election, 342K people dropped off the unemployment rolls and lowered the unemployment rate to below 8%--a benchmark number vitally important to President Obama who promised his stimulus would ensure we wouldn’t hit 8%.
Finally, this is the second hinky looking report/revision from the Bureau of Labor Statistics in as many months. Just days ago, 400,000 jobs were "discovered"--almost the exact number Obama needed to have a record of creating more jobs on his watch than were lost.
The Obama-friendly media is rolling out some very convenient talking points, with NPR crowing in its half-hourly news bulletin: "The unemlpoyment rate is now back where it was in when President Barack Obama took office in January 2009." Except it isn't, exactly.

http://www.breitbart.com/Big-Government/2012/10/05/Fuzz-Math-CNBC-questions-unemployment-drop

Amerika

Yesterday Forbes didn’t like what Jack Welch did (perhaps their editors like spending their time on MSNBC shows)
http://www.forbes.com/sites/jeffbercovici/2012/10/09/jack-welch-quits-columnist-gigs-over-tweet-blowback-too-bad-he-wasnt-fired/?commentId=comment_blogAndPostId/blog/comment/1165-9946-8300

Today Jack Welch doubles down on his assertion.
http://online.wsj.com/article/SB10000872396390444897304578046260406091012.html?mod=WSJ_Opinion_LEADTop

nagilum2

I like Jack Welch but I really think he's wrong in this case. Jack's position is that the US economy would have to be growing like mad to get those figures, which is why he doubts them, but his assumption is based on his own mental model linking economic health to the unemployment rate. This linkage is has actually been broken for the last few years.

A ratio can go up if the numerator increases OR if the denominator decreases. The unemployment rate is not a ratio of one minus the total employed population divided by the total working age population, as many people assume. The denominator in the "unemployment rate" is an artificial number - the product of the working age population and the "labor participation rate". In the US, the working age population counted as not technically participating in the labor pool is larger than in Europe, thus decreasing the labor participation rate for the purposes of calculating the US unemployment rate. (By way of example, the labor participation rate in the US is currently lower than both Spain and Greece)

As a result of this, the official unemployment figures in the US are nearly always underestimated compared to eurostat figures.

However, the expectation of how well the US economy was performing in relation to the unemployment number remained consistent, because the amount by which the real unemployment deviated from the official number remained fairly constant (you can see for yourself at the website data.bls.gov).

During the Obama administration, however, this relatively constant deviation ceased. The gap between real unemployment and reported unemployment increased dramatically as a result of the bottom falling out of the labor participation rate. Because of this, real unemployment has gotten much worse, even while the "official" unemployment rate has decreased.

Basically, Jack was wrong because his mental model said that decreasing unemployment should mean a better economy. And in recent history in the US, at least the derivative of both real unemployment and official unemployment basically tracked one another. But as of around 2009, the unemployment rate no longer served as a valid barometer for economic activity because the for the first time in recent history the derivative of the official figure no longer matched the derivative of the real figure, causing a divergence which can be clearly seen here.


http://www.shadowstats.com/alternate_data/unemployment-charts

Cork boy 55

It's not just Jack
Is there more data before election day?

Rick Santelli from CNBC goes on a magnificent rant here about the US Jobless rate released last Friday in this Video clip linked here.


http://www.zerohedge.com/news/2012-10-09/santelli-slams-surprise-unemployment-data-epic-screamfest

nagilum2

Cork boy 55 wrote: »

It's not just Jack
Is there more data before election day?

Rick Santelli from CNBC goes on a magnificent rant here about the US Jobless rate released last Friday in this Video clip linked here.

Santelli is a TV personality and rants make for good ratings in the US. And don't get me started on CNBC.

The fundamental problem is that the vast majority of people have no idea what the unemployment rate even means. Simply complaining that the number is wrong or somehow cooked without saying why isn't helping.

If they want to attack it in a useful way, they should look at the publicly available data that the BLS boffins plug into the publicly available formula to generate the number.

If they did that, maybe we'd get more useful statistics and more informed people.

Duck Soup

So let me get this right. When the unemployment rate is 8.1%, it's a damning indictment of the President's policies written in plain black and white from the unimpeachable, impartial and official Bureau of Labor Statistics.

When the unemployment rate is 7.8%, it's a confected nonsense not to be believed, from those partisan, unscrupulous and Machiavellian shysters at, errr, the Bureau of Labor Statistics.

Doesn't it occur to anyone that it's just a wee bit inconsistent to trumpet BLS statistics and use them to damn the Obama administration for 40 straight months and then damn the statistics and BLS themselves when they don't suit your narrative any more?

Jesus wept. Talk about clutching at straws.

Amerika

Bottom line is… if the drop to 7.8% unemployment number is to be believed, then nearly 900,000 jobs were created in September. Pretty much nobody here except for the Obama party faithful, and his minions in the media, believes that. And in politics, perception is everything.

Duck Soup

Amerika wrote: »

Bottom line is… if the drop to 7.8% unemployment number is to be believed, then nearly 900,000 jobs were created in September. Pretty much nobody here except for the Obama party faithful, and his minions in the media, believes that. And in politics, perception is everything.

Bottom line is the Bureau of Labor Statistics is to be believed and cited endlessly by Republicans, or it's not. It can't be both.

nagilum2

Duck Soup wrote: »

Bottom line is the Bureau of Labor Statistics is to be believed and cited endlessly by Republicans, or it's not. It can't be both.

It absolutely can be both, because the BLS produces more than just the official unemployment rate. It's just that the republicans missed a opportunity by focusing on that one number.

The official rate (U-3) has always been, an optimistic number. Of late it has gotten much more optimistic than it has been historically. Real unemployment (U-6) and the official rate have been diverging for 3 years, so republicans can't pretend they didn't know that the underlying data told a much worse picture. The republicans should always have focused on the underlying BLS data, which tells a much bleaker picture.

Duck Soup

nagilum2 wrote: »

The official rate (U-3) has always been, an optimistic number. Of late it has gotten much more optimistic than it has been historically. Real unemployment (U-6) and the official rate have been diverging for 3 years, so republicans can't pretend they didn't know that the underlying data told a much worse picture. The republicans should always have focused on the underlying BLS data, which tells a much bleaker picture.

You're absolutely right, and I've heard many commenters on various sites citing the U-6 number in particular. What I don't understand is why so many Republican commentators are going off on a ludicrous rant about the Bureau of Labor Statistics conniving in a darkened room with Obama officials, mumbling "mwaaahahahaha" and jimmying the numbers.

Actually perhaps I do. The vast majority of people respond solely to headline numbers. So, for example, they don't parse the underlying trends that dictate the price of gas at the pumps, they just know it's more expensive. Something Republicans have not been slow to exploit.

Similarly, no one much listens to the explanation of rising commodity prices etc that push the inflation rate up, they just respond to the headline inflation number. Once again, something Republicans have always been happy to turn to their advantage.

Faced with explaining the underlying facts, numbers, pressures and trends around the headline unemployment rate to a disinterested public or talking in foamy-mouthed conspiracy theories, they opt for the latter. It's not what I'd call raising the level of public debate.

So yes, Republicans can argue that the headline number and other numbers tell two different stories. What they can't do is say that the BLS is non-partisan and of unimpeachable integrity the day before the latest job figures and argue that they're unscrupulous shysters the day after the latest job figures.

nagilum2

Duck Soup wrote: »

So yes, Republicans can argue that the headline number and other numbers tell two different stories. What they can't do is say that the BLS is non-partisan and of unimpeachable integrity the day before the latest job figures and argue that they're unscrupulous shysters the day after the latest job figures.

Agree totally. From a political perspective, getting hysterical over the number instead of EXPLAINING the numbers beneath it simply shines a flashlight on the most optimistic figure in the bunch. Why they'd want to do that is beyond me.

joseph brand

Cork boy 55 wrote: »

So just a few months away from a general election and good old Obama needs some positive spin. What better way to spin that use the tried and tested method of pretending there are more people at work and unemployment is falling.

No way, he couldn't do that, tin foil hat time, yes its a conspiracy, Or is it

CAN HE SPIN? - YES HE CAN



http://www.breitbart.com/Big-Government/2012/10/05/Fuzz-Math-CNBC-questions-unemployment-drop

breitbart. Good reason not to read this article.

matthew8

The idea is that a ton of the figures were massively revised upwards on what they were originally reported as. I don't know how we can trust these guys if they're constantly changing old reports.

asherbassad

Duck Soup wrote: »

Bottom line is the Bureau of Labor Statistics is to be believed and cited endlessly by Republicans, or it's not. It can't be both.

Bottom line is

The unemployment rate is close to 20%...in fact may even be beyond it.

The BLS does not publish longterm or underemployed figures anymore. Nice little sleight of hand there. Not only that but 250,000 new jobs need to be created each month just to break even on population growth. So when you hear at the last Friday that that 150,000 new "jobs" (read burger-flippers) were created, that means that 100,000 more jobs are fcuking dead.

8% unemployment in the US???? You wish!!!

Overheal

asherbassad wrote: »

Bottom line is

The unemployment rate is close to 20%...in fact may even be beyond it.

The BLS does not publish longterm or underemployed figures anymore. Nice little sleight of hand there. Not only that but 250,000 new jobs need to be created each month just to break even on population growth. So when you hear at the last Friday that that 150,000 new "jobs" (read burger-flippers) were created, that means that 100,000 more jobs are fcuking dead.

8% unemployment in the US???? You wish!!!

Even Romney admitted that if you add those figures its still only under 11%. Nowhere near 20%.

And unless the appetite for hamburgers has bamboozled this month, I doubt 150,000 new employees are all flipping burgers. I can tell you're a man who likes to debate using sensibility. I like that.