February Employment Report: “Real” or “Fake?”

March 15, 2017

The employment report for the month of February (the first full month of the Trump administration) was released on Friday and the numbers looked pretty good.  The economy added 235,000 jobs and the unemployment rate fell one tenth to 4.7%.  President Trump hailed the news and declared that, though the employment reports during the Obama administration were fake, that the February numbers were very real.

Let’s examine that claim.  First of all, take a look at this chart:  Labor Backlog.  Some explanation is in order.  “Actual labor force growth” is the growth in the labor force if it had grown at the same rate as the overall population as it does in reality.  The “BLS reported labor force growth” is the growth in the labor force that the Bureau of Labor Statistics uses to calculate the unemployment rate.  The “change in employment level” is a figure taken directly from the BLS monthly data.  It’s the growth in the number of people who report being employed in the household survey.  The “labor force backlog” is the difference between the growth in employment level and the “actual labor force growth.”  If the employment level grows faster, then unemployment should decline along with the “labor force backlog.”

Note that during the Obama years, the BLS consistently reported less growth in the labor force than what the growth in the population would suggest.  Only in 2012 and 2015 did the BLS report labor force growth that was slightly above actual growth.  The result is that the “labor force backlog” grew steadily during the Obama administration until it peaked at the end of 2014 at 6,359,000 workers who were unemployed.  By the end of 2016, that backlog had fallen only slightly to 5,994,000 workers.  In spite of that, according to the BLS, the unemployment rate plummeted from 9.9% in 2008 to 4.7% in 2016.  That’s impossible and the only way that the BLS was able to make it appear that the unemployment rate was dropping was by claiming that workers were dropping out of the labor force or by not growing the labor force as the population grew, or through some combination of those factors.  Thus, when Trump claimed that the employment data was “fake” during the Obama administration, he was exactly right.  If you’ve been a follower of this blog, you know that it’s something that I maintained all along throughout the Obama administration.

OK, so how about Trump’s claim that the numbers now are “real?”  So far, in January and February, the BLS has reported growth in the labor force of 416,000 workers.  The actual growth in the labor force – if it grows in proportion to the population – is only 89,000 workers.  In other words, so far in 2017, the BLS now claims that 327,000 “missing” workers have reappeared in the work force.  That supports Trump’s claim that his numbers are real.  But time will tell.  Two months’ of data isn’t nearly enough to judge how honest the Trump administration is being when it comes to the employment reports.  It’s something I’ll watch just as closely as the Obama numbers.


More “Free” Trade-Induced Job Losses

May 2, 2008

http://www.reuters.com/article/ousiv/idUSN0255111920080502?sp=true

The Labor Department this morning announced the loss of another 20,000 jobs in April, which should come as a surprise to no one.  At the same time, in spite of the fact that our population grows by nearly 300,000 per month (thus yielding a growth in the labor force of about 150,000 per month), somehow this loss of jobs translated into a reduction in unemployment from 5.1% to 5.0%, yet one more distortion of the economic facts by the Bush administration.  Look for both numbers – the jobs losses and the unemployment rate – to be revised upward once next month’s data pushes this month’s data out of the headlines.

Here’s some excerpts, followed by my commentary: 

“April’s job reductions followed upwardly revised losses of 81,000 jobs in March and 83,000 in February. Employers also cut 76,000 jobs in January.”

Thus proving my point about the administration’s penchant for issuing phoney numbers and then revising them later, after they’re out of the headlines and won’t have as much effect on the stock market and consumer psyches.  Also, continuing the statistic that I’ve been tracking each month with the release of this data, the tally for the shortfall of jobs (job losses added to growth in the labor force), we have now fallen behind by 859,000 jobs since the beginning of the year.  If the adminstration was honest, this should have raised the unemployment level by 0.6% to a level of 5.3% or 5.4%.  But, apparently, honesty isn’t the best policy when it comes to managing the national economic psyche. 

“‘It looks like the economy is in better shape than we thought,’ said Owen Fitzpatrick, head of the U.S. equity group for Deutsche Bank Private Wealth Management in New York. ‘I think a lot of people were expecting it to be a lot worse.’”

Wrong, Mr. Fitzpatrick.  The economy is not “in better shape than we thought.”  It’s in less worse shape than we thought, and only because the government isn’t being honest with the data.  How can unemployment be running at 5% when weekly filings for unemployment are running at an annual rate of about 13%? 

“Goods-producing businesses cut 110,000 jobs in April, the largest number of job reductions since January 2002, after trimming 88,000 in March.”

Where are the economists now who were telling us that the decline in the dollar was good news for manufacturing and that exports would be rising while imports declined?  Not a peep from them lately.  Undoubtedly, they’re busy concocting a new explanation and yet another list of intangible benefits of free trade (intangible because they don’t exist).  Manufacturing jobs continue to decline because the value of the dollar vs. other currencies never had anything to do with the trade deficit. The trade deficit is caused by the gross disparity in population density and per capita consumption between the U.S. and some of its grossly overpopulated parasitic trade welfare recipients.  The only thing that can be done about this factor is a return to tariffs – a tariff structure on manufactured goods that is indexed to population density.  Anything short of this will keep our country on the path to economic ruin. 

Pete