John Ryding and Conrad DeQuadros of RDQ Economics:
This report is a tale of two labor markets. The establishment survey (payrolls) painted a picture of moderately growing employment over the last three months but at a marginally slower pace than over the last year. At this pace of job creation, the unemployment rate should be barely drifting lower given underlying demographic trends. In contrast, the household survey painted a picture of a sharply falling unemployment rate—down 1.2% points over the last 12 months. Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%). We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility). Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline. With this report, the ISMs, and vehicle sales, the September economy is off to a better-than-expected start but nowhere near as good as suggested by the decline in the unemployment rate.
Via Jim Pethokoukis, who adds:
Of course, the economy is not growing 4-5%, not even half that. This a jobs recovery built on part-time jobs, falling wages, and disappeared discouraged workers. As JPMorgan’s econ team noted: “The one asterisk to the good news from the household survey was the apparent low-quality composition of the jobs created, as there was a surge in people working part-time for economic reasons, a development which left the widely-followed U-6 broad measure of underemployment unchanged at 14.7%.”
And that 14.7% number won’t be reported. Being so much bigger than the 7.8% number, which the Obamatons like better and will continue to splash around, pretending to believe it.
Ends justifying the means and all that.
ZH points out how an interesting anomaly in the statistics:
Exactly two thirds? “What are the odds?”
Ahh, yes, linky.
“Lies, damned lies and Statistics.”
— B. Disraeli
I’ll be damned – Jeff called this miracle of number transfiguration back some time ago. I never thought the BLs would succumb that badly – but it looks as if they have. Of course, there will be a “revision” to put things back – post election, naturally.
A reading from the Book of Obama… http://preview.tinyurl.com/8zd58nq
Exactly two thirds? “What are the odds?”
The numbers are generated from survey result extrapolations, then adjusted by an obsolete business creation/dissolution model that hasn’t been updated to reflect recession/depression conditions we have today. Thus, the business creation model VASTLY OVERSTATES small business creation, and small business job creation.
The process is about as close to reality as the cycle/epicycle model of solar system motion was.
A friend who works as a very very high-level consultant writes:
One of the things my shop does is create forecasting models for clients—major firms like [BIG RETAILER] and [BIG FOOD PRODUCER]—you know, people who have to lay out big money on big decisions. We are a consumer of the data produced by the Bureau of Labor Statistics, in the sense that we use it as raw material in models. For example, we use periodic U-1, U-2, etc as predictors of forward sales.
Now imagine me, telling [BIG RETAILER] to load up several tens of million in extra inventory in anticipation of a sales spike in three weeks because BLS says 873,000 people got jobs last month. They would laugh me out of the room before canceling our contract.
If you think there was skepticism about these numbers in the press, you should’ve heard it at my office this morning. We are treating September numbers as an aberration, as, I am sure, is anyone who has to make an actual decision off them.
link
[…] continue to splash around, pretending to believe it. Ends justifying the means and all that. https://proteinwisdom.com/?p=44127 Laissez les bon temps rouler! Going to church doesn't make you a Christian any more than […]
Is not being able to believe any official statistics part of the new normal?
“Sampling volatility” is the new term for shite-for-brains.