Drowning by the numbers
No doubt there are people who see this week's BLS Non-Farm Payroll survey as "not good, but not all that bad either". They can point for instance to the fact that the 85,000 jobs lost according to the report is much better than the 800,000 jobs lost back in March 2009.
The Wall Street Journal puts it like this: ”Even though the payroll number was worse than expected, the data reflects an improvement in the jobs market.”.
But unfortunately, this is all smoke, mirrors, bias and outright falsehood. The Household part of the monthly BLS survey mentions 465,000 lost jobs. 647,000 full time jobs left the building. But that's not even remotely where the true problem lies.
The reason why unemployment, as per the Household survey, stayed at 10% and "only" 85,000 jobs are reported MIA in the Payroll survey can be found in the labor force numbers. From November to December 2009, the "persons not in the labor force" category went up by 843,000 (over 1 million when not seasonally adjusted), and now stands at 83,865,000. The vast majority of those singing off, i.e. not actively looking for work, are people who can't see any jobs anywhere in their environment. The worse the economy gets, the fewer people are counted as unemployed. It’s a lovely invention, but it's also am awfully perverted one.
That is also true for seasonal adjustments in other categories. It’s estimated that that actual initial claims numbers may be double what's reported, simply because the models used are too rigid to take into account present economic conditions. A similar idea is true for continuing claims. Michael Widner at Stifel, Nicolaus says:
”We could conceivably have nearly 11 million people collecting unemployment and see the data reported as a 3.something million figure."
U6 unemployment is up. Average and median unemployment duration is up on all counts. The amount of people without a job for more than half a year is soaring, and these people now form 40% (6.1 million) of the total unemployed. The employment to population ratio fell to 58.2%, the lowest in at least 27 years. The national payroll level went from 130.8 million in 2000 to 130.9 million today. 100,000 jobs added for the 13 million people who were added to the "available" labor pool. In other words, 13 million unemployed were added.
Extended benefits and Emergency Unemployment Compensation, the two programs set up for the long-time jobless, are bursting through their seams. A slight decrease in initial and continuing jobless claims may seem to indicate something positive, but the reality is that people don't leave these programs because they find jobs, but because they've exhausted their benefits and are forced into extended and emergency programs. There are strong suggestions that the latter grew by some 43% in just the past month.
And though we've seen no mention of it this week, we haven't forgotten that the BLS "owes" us the 824,000 jobs they "forgot" to count till March 2009.
No matter where you stand, no matter what you see the economy doing in 2010, it should be clear to everyone who can read by now that reporting on unemployment in the US is a god-forsaken mess, strongly biased towards what pleases Washington, i.e. numbers much lower than the real ones. That said, while many citizens may still be fooled by the official data, you can bet that Washington knows perfectly well what the real numbers are, and many hours of backroom meetings are dedicated to the topic. How much of that reflects genuine care for constituencies, and how much mere worry about election numbers, we’ll leave up to you to ponder.
The same mentality that leads to the severely distorted jobs numbers speaks loudly from the AIG files, that increasingly question Tim Geithner role in the $100+ billion handed to Goldman Sachs et al as 100% compensation for lost credit default swaps wagers. And that, predictably, leads to calls for the resignation of Geithner.
But we've seen similar calls for Ben Bernanke and Larry Summers to resign. And they're still there. Moreover, what difference would it make to remove one of them and leave the others be where they are? If you don't clean up for real, why bother? It becomes just another silly game that way, doesn't it?
Reminds me of a man named Travis Bickle, who said some 35 years ago:
"All the animals come out at night - whores, skunk pussies, buggers, queens, fairies, dopers, junkies, sick, venal. Someday a real rain will come and wash all this scum off the streets."