Jobs Report - Damn Lies and Statistics

By
Services for Real Estate Pros with Timu Corp - CEO, ActiveRain - Co-founder

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.

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  1. Judi K Barrett 08/16/2009 10:04 PM
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Rainer
1,092,162
Matt Heaton
Timu Corp - CEO, ActiveRain - Co-founder

Both Forbes and the Wall Street Journal published articles on this topic.  It's nice to see not all of the main stream media is taking the headline number at face value.

http://www.forbes.com/2009/08/08/jobs-unemployment-layoffs-business-washington-figures.html

 

August 08, 2009 08:48 PM
Rainer
1,092,162
Matt Heaton
Timu Corp - CEO, ActiveRain - Co-founder

Mark: I found the answer to your question in the Forbes article above. 

"He notes that in calculating its broadest jobless rate, the so-called "U-6," the Labor Department in 1994 stopped including unemployed workers who had stopped looking for a job for more than year."

So that's how U-6 went down even while we lost jobs.

August 08, 2009 08:55 PM
Ambassador
1,319,822
Richard Iarossi
Crofton MD Real Estate, Annapolis MD Real Estate
Coldwell Banker Residential Brokerage

Matt,

I never realized that html has finally progressed to include a tag for sarcasm. I've been waiting for that.

I read last week here in Maryland that they can't identify the number of jobs that have been created by the stimulous plan. The reason...the Feds haven't told them how to do the accounting yet.

Disraeli was right with his famous quote about statistics.

Rich

August 08, 2009 09:30 PM
Rainer
1,092,162
Matt Heaton
Timu Corp - CEO, ActiveRain - Co-founder

Unfortunatly most browser's don't seem to render my sarcasm tag correcty, hopefully it gets standard support in the next version of HTML.

August 08, 2009 09:36 PM
Rainmaker
558,659
Chris Olsen
Broker Owner Cleveland Ohio Real Estate
Olsen Ziegler Realty

Hi Matt -- I totally agree.  I don't trust a whole lot of what comes out of the feds, except for stating the total national debt keeps rising.  Underemployed, those no longer looking for work, etc., aren't counted in the unemployment stats, among other things.  Sometime's I think there are a bunch of Freshman 1st Lieutenants steering a large aircraft carrier using buoys as guidance with no captain on board, and you get a bunch of underinformed, relative and shallow opinions.

August 08, 2009 09:55 PM
Ambassador
895,064
Missy Caulk
Realtor - Ann Arbor Real Estate
Missy Caulk TEAM

I don't think they counted the number of folks whose unemployement benefits ran out either.

Most jobs being created now are government for short terms effects.

August 08, 2009 10:24 PM
Ambassador
1,550,626
Christine Donovan
Broker/Attorney 800-610-7253 DRE01267479 - Costa M
Donovan Blatt Realty

Does it really surprise anybody that the numbers have been manipulated and are not truly representative?

August 08, 2009 11:09 PM
Rainmaker
146,982
Carol Pease
CRS, Broker-Associate 512-721-6320
Pacesetter Properties

I'm very cynical about what  I read in print.  What spin is the government going to put on the job situation next week.  I often check the BBC site to get a more global view of what is actually happening in our own country.

August 09, 2009 12:23 AM
Rainmaker
134,415
Paul Francis
Las Vegas Real Estate - Summerlin Homes - 702.592.
Prudential Americana Group - REALTORS

When so many have lost their job already... the jobs lost numbers go down. New "non-government" jobs keeps declining...

The really scary thing brewing up is the number of people on the Extended Unemployment benefits that are set to run out starting in September.... unless it's extended even more with borrowed money. I'm actually shocked by how many people I personally know that are nearing the end of their Unemployment Benefits. Luckily... many of the ones I know own their homes free and clear but I'm sure there are quite a few that are not so lucky.

August 09, 2009 05:56 AM
Rainmaker
1,775,119
Gabe Sanders
Stuart Florida Real Estate
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales

Matt, I'm with you here.  It's amazing how less bad news, or not as bad news is now becoming good news!

August 09, 2009 07:44 AM
Anonymous #20
Anonymous
Anonymous

This administration has been very clever and good at spinning all kinds of stats.   It has also been really good at contradicting itself.  Remember Obama stating that he doesn't look at the stock market and later using the rising Dow as an example of the economy improving?  The media and the average person who voted for Obama doesn't care.  Anything he says is gold to them.

August 09, 2009 09:05 AM
Rainer
178,939
Mark MacKenzie

Matt:  Thanks for the follow up.  That makes a lot of sense.  Apparently we need a new U-7 number to start tracking unemployment. ;)

August 09, 2009 01:10 PM
Ambassador
1,850,373
Nestor & Katerina Gasset
Realtors, Wellington Florida Homes For Sale
International Properties and Investments LLC

Matt- They are not counting the people who have given up looking for a job and are no longer getting unemployment and they are not counting the people forced into part time jobs instead of their full time jobs that they got laid off from.

I don't like being lied to but as far back as I can remember, they have been lying to us. Of course, it has gotten worse. But if you read Forgotten Man and see some of the horrific things that FDR did during the depression, like not allowing food to be sold while people are starving to keep the prices up on food!  Katerina

August 09, 2009 03:05 PM
Rainmaker
453,501
John Mulkey
Housing Guru
TheHousingGuru.com

Matt - Then we have all the self-employed contractors, Realtors®, mortgage brokers, etc, whose income has dropped or disappeared. That's a huge chunk of potential consumers who have no confidence; and as to confidence, it cannot rise until there are fundamental reasons for it to do so.

August 09, 2009 04:23 PM
Rainer
27,393
David L. Montgomery
David L. Montgomery
MULAMONT REALTY, LLC

An old radio talk show host here in the Detroit area Mark Scott; coined the phrase "I love my country but I fear my government" -- nuff said.

August 09, 2009 05:09 PM
Ambassador
883,319
Lane Bailey
Realtor & Car Guy
Century 21 Results Realty

We have a edia that largely supports this administration.  Many of the same folks that will spin this FOR the administration were questioning things a couple f years ago. 

But there is no doubt that the government, regardless of who might be in charge, is perfectly willing to drop transparency in order to meet its own goals.

August 09, 2009 09:20 PM
Ambassador
1,859,287
Judi K Barrett
Broker/Owner, Integrity Real Estate Services -IDAB
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma

The spin that gets entangled around everything sure is discouraging.  So where is the truth.. can it be found?

August 16, 2009 10:07 PM
Rainmaker
328,682
Steven Nickens
R(S)GRI ABR, Maui Real Estate Hawaii
Island Sotheby's International Realty

If they would just cut waste in gov't jobs, and cut the spending that is taking us down the wrong road, there would be a chance of recovery.

July 23, 2010 09:37 PM
Rainmaker
520,037
Jim Lee
Portsmouth NH Realtor, Portsmouth, NH
RE/MAX By The Bay

"What you do speaks so loudly I can't hear what you say." Not sure who said that but he or she was a pretty smart person.

January 05, 2011 10:30 PM
Anonymous #29
Anonymous
Anonymous

I live in a town Forbes has voited to be #1 city for jobs - Austin, Texas. I scratch my head everytime I hear these types of statements. I have so many friends here in Austin that have been out of work, let's say now for about two years, it just blows my mind. They all have Master's Degrees and are good honest, altruistic people. They have applied for work at $10 hr and are overqualified; other jobs most likely they are "too old" (hey, is not the 50's the new 30's??) Maybe I dreamt that. 

I have a handful of potential customers that want to buy homes, however, the job market is eluding them - and their families! Personally, I think our country is pretty clueless about what's going on. My market lately has been the investor market. I can tell you this...Austin, Texas is an incredible place to invest. Current population now is @750k with an expected growth out to 2030 or 3 million. So, with that said, I'm staying put! You know what they say...."This too shall pass."

 

September 17, 2011 01:51 PM
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