Thursday evening I noticed something very interesting going on within the "financial media". All of a sudden the evening before Friday's big jobs report many of the media outlets started to run stories about how great the jobs report on Friday was going to be, and how it was clearly going to show our economy had turned the corner. Several financial analysts (and I use the term analysts lightly) suddenly downgraded their predictions for job losses to around 250k from much higher numbers and CNBC even took the effort of running a 1/2 hour special on how great the numbers were going to be.
Pumping up impending economic numbers in the financial media is not uncommon but this went FAR beyond anything I'd ever seen before. It was pretty clear there was some type of coordinated leak. The media outlets would have not stuck their necks out to the degree they did the evening before the numbers came out if they weren't sure of the outcome. It's not uncommon for gov. administrations to influence the media this way, by leaking reports to create positive press but this tactic seems is being taken to an extreme level lately.
Sure enough Friday morning the jobs report came and we only had 247k job losses a huge improvement from previous months, <sarcasm>clearly a sign the recession is nearing it's end</sarcasm>. Simply the that fact you saw unemployment rates decline at the same time you had 200k job losses should be a tip off that unemployment statistics are not all that they are cracked up to be. In fact when you look inside the internals of the report you see a lot of interesting number fudging to make the headline number look much better than it should have been. The report on the whole was certainly not what I would label as proof that our economy is on the mend.
One thing that pops out was the insanely huge number (422k) of people that "exited the workforce" in July. Due to the method unemployment statistics are calculated, they don't count. One reason for this is many of the layoffs, particularly at large unionized companies happen through "early retirement" programs and thus don't effect the unemployment stats in the same way. The other is as people use up their unemployment benefits without finding a job they drop off the reporting. From the standpoint of economic health, it's still less people working, earning less money to spend and paying less taxes. In fact if the US has a shrinking workforce at the same time our population is still expanding that is really bad news economically.
There were also some other one time items that added a positive influenced the jobs report more positively such as a large number of the jobs created were census workers, who will only be on the job for a couple months. The birth-death model a model that's supposed to account for creation of jobs via new companies that otherwise don't show up in the statistics also showed by far and away the largest job creation during a July in history. Never mind this is a completely ficticious number that just comes out of a computer model, not from any actual data. These numbers get revised at the end of the year based off real tax withholding data. So far tax withholding data from the first six months of the year suggests we had 500k-1m more job losses than the computer models say.
There seems to be a huge and coordinated initiative to spin and scew any economic data being presented right now, to increase public confidence. It's really starting to bother me, I don't like being lied to or manipulated. True, this happens all the time, but to the degree it's occuring right now makes me think there maybe a lot more fear in the gov. about our economic situation than they are letting on.