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.
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?
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.
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.