I want to point readers to a wonderful interactive graphic page on Bloomberg in regards to the headline above. There are a lot of neat charts to click on (anything in green) so I cannot bring it to the website or embed it - go here. (it's worh it)
This touches on the nonsense birth / death model the US uses to count the creation or destruction of companies too small to measure; we highlighted it long ago. .[Jan 27, 2008: Monthly Jobs Report & Birth Death Model] In normal times, such an estimate is subject to 'thumb in the air' guesswork, but during transitions from expansion to recession it's subject to massive inaccuracy. For example, many months during the past two years (frankly in almost every month) the government has said small businesses have been adding jobs (a miracle indeed) - somehow believing while large and middle sized companies are shedding workers at historic pace, the small business world was immune. (I guess they believe small private business is just like federal government - immune to the business cycle). I'd argue the complete opposite; small business has probably been hit the hardest during these Great Recession. In fact the birth death model is such a joke, in some of these months the government has been adding jobs even in fields like construction! It must be nice to make numbers up at your job... oh well, close enough for government work. Laughingly according to the Bloomberg piece the government has no plans to make adjustments to the birth / death model - I mean why fix something that's a complete failure... only a few fringe blogs bother to worry about it anyhow.
This is an issue we highlighted long ago, and let us give special notice to Mish Shedlock who has been on this bandwagon, spreading the word to a much larger audience. He still takes the time once a month to analyze the labor data, which I find close to useless after doing it myself for a long while. The birth / death adjustment is but one of many things making the monthly labor reports a garbage in, garbage out data point. The last time I really delved into all the adjustments done over the year to make the report sunnier than it should be was almost a year ago - if interested feel free to peak here. [Apr 3, 2009: Real March Unemployment Rate Reaches 12.5%] The irony is Wall Street takes these numbers at face value and as long as it beats the estimate everything is fine. Even if in retrospect the number was understated by 70, 80k a month. A year ago at this time when the yearly adjustment (i.e. the oopsie we overstated things) happened roughly 800K more unemployed people were found. Bloomberg expects the same this time around.
Ironically, a private firm (imagine that) has been far more accurate on their estimates when you compare what they put out initially versus the multiple revisions data that comes out government a year after the fact. [Dec 6, 2009: TrimTabs Continues to Dispute US Government Payroll Data] Which is why I say, let's shut down the Bureau of Labor Statistics - or at least the portion that does this gosh awful estimating - save tha taxpayer a few bucks, and farm out the work to TrimTabs who will give us many times the accuracy for I am sure a fraction of the cost. But I suppose that would not allow Americans to continue their happy existance within the Matrix, living in a cloud of morphine.
I continue to believe, as best as I can estimate - if the US still counted the unemployed as it did pre 1990s - we'd be somewhere around a 14% unemployment rate [Oct 2, 2009: True September Unemployment in America Reaches Towards 14%; Our System is Broken] Hence, all this talk of it's not as bad as the late 70s, early 80s is just part of the normal misinformation campaign. Recall, in America if you are not actively looking for a job for 4 weeks - *poof* - you are no longer unemployed in the government's eyes.
Anyhow, let us welcome another 800K or so new Americans to the unemployed rolls Friday... well technically, we are not welcoming them - they've been there all along. Government just finally admitted it; perhaps we can plug them into the census jobs that should be ramping up hiring the next month or two. [Dec 20, 2009: NYT Economists See Lift in 2010 Census]