Presto! Unemployed people vanish before your very eyes

The big economic news today is the unemployment rate dropped slightly.

The rate unexpectedly fell to 10 percent, from 10.2 percent in October, as employers cut the fewest number of jobs since the recession began. The government also said 159,000 fewer jobs were lost in September and October than first reported.
If part-time workers who want full time jobs and laid-off workers who have given up looking for jobs are included, the so-called underemployment rate also fell, to 17.2 percent from 17.5 percent in October.

Understand that I'm suspicious of any government numbers, especially positive economic numbers, because politicians have a long tradition of lying with them. So when these numbers came out so much better than everyone expected, I decided to look at the raw numbers.

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The first and most obvious thing that jumped out at me was how the civilian labor force dropped by nearly 100,000 people, in both the seasonally adjusted (SA) and non-seasonally adjusted (NSA) numbers. The number of people not in the labor force climbed about 290,000, both SA and NSA. That brought up the obvious question of: where did those people vanish from?
The number of employed went up by 227,000 in the headline, seasonally adjusted numbers (only 47,000 in the non-seasonally adjusted numbers). Therefore it wasn't the employed that got dropped off the labor force.

It turns out that 375,000 unemployed people (SA) simply vanished from the numbers like magic. Houdini would be envious.
How is that possible? Did all these unemployed people suddenly get independently wealthy and no longer need a job?

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To understand how this could happen you need to look at the initial claims unemployment report from yesterday.
If you had only read the headline, you would have saw something like this.

In the week ending Nov. 28, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week's revised figure of 462,000. The 4-week moving average was 481,250, a decrease of 14,250 from the previous week's revised average of 495,500.

To get the real story you needed to read all the way to the bottom of the official report. The very last line says EUC 2008. It is the Emergency Unemployment Compensation (EUC) program that Bush signed into office before he left. The number of people receiving EUC increased by +265,300.

That means that an additional 265,300 people exhausted all 26 weeks of state unemployment benefits and rolled onto the federal dole.

The number of people receiving Extended Benefits jumped by 58,157. These are people that have exhausted both their state unemployment insurance AND their EUC benefits, and are now on benefits that Obama signed into law.

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To put it another way: there are no jobs out there. No one is hiring.
People are dropping off of official statistics, whether they've given up looking, or simply are no longer being counted, and that is the only reason that the numbers weren't terrible yet again.

According to IRS statistics, the employment situation is far worse than the BLS numbers.

TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November. This past month’s results were an improvement of only 10.2% from the 284,000 jobs lost in October.
the BLS is grossly underestimating current job losses due to their flawed survey methodology. Those flaws include rigid seasonal adjustments, a mysterious birth/death adjustment, and the fact that only 40% to 60% of the BLS survey is complete by the time of the first release and subject to revision.



Great catch...

...and much thanks for keeping us current on the "Alice in Wonderland" numbers game!

The Prez urges the same lame losers, who know how to do only three things in the world of fantasy finance, to figure out how to solve the unemployment prob!

Those three things?

(1) Offshore American workers' jobs
(2) Peddle junk paper (credit derivatives and various instruments of debt -- hence all those debt-financed billionaires)
(3) Leveraged buyout "pump and dumps"

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I knew something like this would be looked at

and while I calculated out much of this, I took the positive side on the number, for even with all of this, due to the actual jobs available, those numbers could have been lower.

So, I guess we're "fair and balanced" now instead of those "doom and gloomers" (perhaps because it really is seriously suck ass for the U.S. middle class and has nothing to do with "negative thinking"????)

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I salute your courage

in posting this over at DK after that diary by SilverOz. What really got me is Oz goes through how bad the numbers are, then suddenly squats and emits that next to last paragraph about how great this news is. And it hit the rec list. Damn, lotsa people got lotsa learning to do.

In the rest of the media and on the tubes, the slight downtock in unemployment pretty much drowned out any coverage of the jobs summit, which, from what I can see, was a farce. President Obama reportedly said that the government can do little to improve the employment outlook. This is a major marker of ideological defeat. Neo-liberal economics marches triumphantly on to our doom.

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SilverOZ was the one who inspired me to write this essay. Normally I like SilverOZ. I don't always agree with him, but he seems like he's pretty together.
But when he started quoting from the Bonddad Blog I had to make a reply. I didn't expect it to get nearly the traction that it did.

I didn't watch the jobs summit. I didn't care unless it produced something, and if it produced something I would have read about it.

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jobs summit, midtowng on cross posts, need modifications

When cross posting, change the first title to Originally posted on The Economic Populist.

We're going to get lower ranked if you just directly copy and past posts around. And since this is economic reality 24/7 home base, that's not good for us.

I read the EPI proposals and frankly to me they are pure shit. Generated by their various special interest groups, not the most bang for the buck.

I literally became depressed to hear that Obama thinks it's just grand to do a "Stimulus" to insulate people's houses and add "double pane windows".

I don't think a single one of these people has held a real job or been out in the real business world.

If you read the AAM report, they are squeezing the nickels out of funds and it's such a superior plan that would generate advanced jobs skills, significantly help the U.S. national economy due to improved infrastructure efficiencies, upon which we rely and they acknowledge workers must be U.S. citizens/legal residents and all supplies must be domestic...

i.e. they get it, they know pouring public funds overseas isn't going to stimulate much....except those foreign nation's GDP.

Bonddad has been "right all along"? Jesus. I haven't kept a tally but it seems over and over and over again the predictions have been wrong, esp. on unemployment.

OK, here's something on EP which I think is a feature we really need to enhance....that's being very technically accurate. There seems to be some sort of personalities before facts activity going on and in my book, correct is correct, wrong is wrong.

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a stat that is rarely looked at

This WSJ has a post, a lost decade for jobs. The U.S. produces less jobs than it did a decade ago, even though the working population has obviously increased.

Notice the post refuses to mention the obvious, that's millions of jobs offshore outsourced or created in other countries by U.S. multinationals...instead of the U.S.. They also refuse to recognize the displacement of U.S. workers with foreign guest workers.

But the total number of jobs and then looking at the total working population is a statistic which never makes the unemployment articles, headlines.

Even worse, per occupation, if you are squeezed out of your career field, the minute you take that Wal-mart job...your career is now "retail sales" instead of PhD biomed researcher or whatever it was previously.

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Jobs numbers don't jive with ISM

Something tells me that the unemployment numbers are going to be revised to a much worse level.

The jobs report showed an expanding service sector, the ISM didn't? Friday’s employment report showed that the Service Sector added 58,000 jobs. This doesn't jive with the Nonmfg ISM data released last Thursday. Nonmfg ISM was expected to show a reading of 51, but came in at 48.7 reflecting a contraction in the Service Sector. The jobs component came in at 41.6 suggesting job losses.

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on the total # of jobs

I agree. This report is out of alignment not only with the ISM but also with the private ADP report, which people were actually looking at a worse report from BLS...

It's out of alignment with the Manufacturing reports, Consumer spending, name it.

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1-in-35 chance jobs number was right

This article pretty well sums it up.

It’s remarkable nobody talks about this. The big surprise in the payroll data was the service sector component; it rose 58k. But we know from the ADP report that service sector employment fell 81k, which was fractionally worse than the 79k decline in October. Such a discrepancy has occurred less than 3% of the time in the past, and each time, the following month after the big gap, there was a convergence ... with headline nonfarm payrolls swinging 100k lower on average, which would imply a 111k decline when December’s figure comes out.
Also take note that the +58k print in the service sector payroll was completely at odds with the 41.6 reading in the ISM non-manufacturing employment index in November — a figure that in the past was consistent with a -192k tally in service sector payrolls and never before aligned with a positive number. Go back to the 2001 recession, and the worst ISM non-manufacturing jobs subindex was 43.9 (right after 9/11) and here we published a figure that was more than two points shy of that!

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