Sunday, October 7, 2012

The Unexpected Drop In Headline Unemployment Rate

Lies, Damned Lies and Statistics!
The September employment report was, for the most part, more evidence of the recovery is anemic. The surprise was the "Household Survey" showed the unemployment rate suddenly dropped from 8.1% to 7.8%. This number, of course, dominates the headlines. Needless to say there was (and should be) widespread skepticism. The Left calls the Right "nutty" for questioning such a fine bunch of professionals at the BLS.

I say, you'd be nutty not to be skeptical!  It's particularly disturbing when The Media is not skeptical. A vigorous, skeptical and investigative media is a vital part of our democratic freedom!  We don't have that now. The Media is not skeptical enough of Obama and not skeptical enough of it's own government.  But that's another blog.

The Data
The Household survey reported that 873,000 jobs were created including an unusual number of 600,000 part-time workers and a surprise increase of government employment of 187,000.  The government sector has been has been flat or losing jobs for years now as The States have been trimming employment.

The last time 873,000 jobs were created (forget that most were part-time; hamburger flippers?) was in 1983 when the economy was growing at 9.3%!  So, the Household survey suddenly has the strongest report in 29 years at a time when there is broad consensus that the economy is growing at about 1.5%?  That's a red flag.

If that's not enough, there were other red flags.

  • The "Establishment" survey only reported 114,000 new jobs.  
  • The broader measure of unemployment, the U-6 unemployment rate, which is supposed to include people working part-time but want to work full-time, didn't change from last month and stands at 14.7%.  If the majority of new jobs were part-time, they should have caused a drop in the U-6 rate as well.  
  • The increase in government jobs is suspicious too.  

Yes, the Household survey is notoriously volatile, so we'll see how this evolves. But don't call me a "nut case" for having suspicions. I should be thanked for questioning and investigating this matter, not vilified!

A Telling Incident At Bloomberg Website
Jack Welch expressed a knee-jerk skepticism of the unemployment number in Twitter.  The Left Wing went after him right away calling him desperate and ignorant.  Bloomberg ran an article in it's opinion section called "Jack Welch Doesn't Know What He's Tweeting About" by Deborah Solomon. It was a "hit piece" countering Jack Welch's opinion with just more opinions (not hard facts).  It was at the top spot for popular articles too.

I responded once to the article noting that Jack was an accomplished titan of industry and had earned his right to his opinion compared to "dime-a-dozen" journalists.   I got a couple of flippant and derogatory replies from a couple of readers.

I replied to these replies with the fact that Deborah Solomon's career was as an Art Critic!   I found out that she has an undergraduate degree in Art and a Masters in Journalism.   Her journalism career is nearly all in art criticism.  I found the irony in this delicious.   Here she was contradicting a distinguished titan of industry saying "he doesn't know what he's talking about" when her credentials are in art criticism!  Who doesn't know what they are talking about??

My observation and reply comment was "moderated" away and they didn't post it!    

No comments: