When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Friday, February 3, 2012

January jobs report--"Washington Fudge"

You think the January jobs report is good news? You better think again--they're "fudging" the numbers in Washington--no surprise since this is an election year.  My source? How about Floyd Norris in the New York Times--

Wow. But Is the Number Real? - NYTimes.com: "How many jobs did the American economy add in January?

The Labor Department estimated on Friday that the economy gained 243,000 jobs.

The department also estimated that the economy lost 2,689,000 jobs in the month.

The difference in the two numbers is in seasonal adjustment. Employment always falls in January, as temporary Christmas jobs end. So the government applies seasonal adjustment factors in an effort to discern the real trend of the economy apart from seasonal fluctuations. The actual survey showed the big loss in jobs. The seasonal adjustments produced the reported gain of 243,000 jobs.

A reason to doubt the number is that there has been a tendency in this cycle for the seasonal factors to overstate moves, in both directions. Labor mobility is down, as fewer workers quit to seek better jobs and employers both hire and fire fewer people than they used to do. If the seasonal adjustment was too large, then the gain should be smaller."

In other words, the economy lost jobs last month. But the Obama administration creates a "positive report" by using unreliable "seasonal adjustment factors." Well, at least Floyd Norris in the New York Times isn't fooled. How about you?


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects