The October Surprise jobs report (UPDATED)

Obama the MagicianThe Bureau of Labor Statistics reported that U-3 unemployment for September dropped to 7.8% after seasonal adjustment. Good news? No. Employment’s at 92.2% now? No. Surprising news? No, it was completely predictable.

I’m only surprised that they fudged the numbers so blatantly. I thought they’d at least try to be more subtle.

The U-3 unemployment number doesn’t tell the whole story. But don’t just take my word for it. James Pethokoukis explains:

Yes, the U-3 unemployment rate fell to 7.8%, the first time it has been below 8% since January 2009. But that’s only due to a flood of 582,000 part-time jobs.

The broader U-6 rate — which takes into account part-time workers who want full-time work and lots of discouraged workers who’ve given up looking — stayed unchanged at 14.7%. That’s a better gauge of the true unemployment rate and state of the American labor market.

The labor force is collapsing. Confused? Look at it this way.

8% unemployment
8% unemployment

8% unemployment (technically)
8% unemployment

When the BLS plays with the number of people it designates as “discouraged workers,” then you see results like today’s report of 7.8% unemployment. The Obama BLS is cooking the books to make Obama look better.

Scroll back up to the top of this page. Look underneath the banner for a link labeled “Unemployment 101” and read what’s there a few times until you have a good grasp on the accounting tricks you’re being fed by the Obama BLS.

12:05 Update: Yet more accounting tricks, this time with government jobs vs. private sector jobs.

12:25 Update: The total number of unemployed and underemployed people reveals another aspect of the BLS’ deception. Look how it jumped today.

12:55 PM Update: They forgot to cook the rest of the books to hide the trickery.

1:10 PM Update: Busted. Caught red-handed. Utter bullshit.

1:15 PM Update: Lies, damned lies, and statistics.

4:05 PM Update: If the economy really created 873,000 jobs last month, why isn’t Obama crowing it from the rooftops? Because he knows it’s utter bullshit, that’s why.

4:20 PM: Nope, nothing fishy going on. Nothing to see here. Move along. The first positive news for September employment among 20-24 year olds — ever — is completely legit.

BLS fraudulent September 2012 report

Sure, every other September sees these college-aged kids going, y’know, back to college. But not in the 4th Year of Our Lord Barack Obama. Forward, comrades! All is well!

Wanna buy some sweet oceanfront property in Arizona? I can sell it to ya cheap.

Unemployment October Surprise? (UPDATED)

20121003-111419.jpgOct 5, 2012 Update: And just like clockwork, they’ve cooked the books again.

Don’t be surprised if August’s unemployment rate gets quietly revised from 8.1% to 8.0% this week. That would set up a more plausible-looking report of 7.9% unemployment for September, since a drop from 8.1% to 7.9% right before the election would look too suspicious.

The Obama Administration can continue to fudge the unemployment numbers by playing around with the number of “discouraged workers,” who have stopped looking for jobs and no longer count as “unemployed” in the Bureau of Labor Statistics reports.

If that happens, watch for a last-minute blitz of ads from Obama’s campaign trumpeting that unemployment is finally under 8%, thanks to Dear Leader’s wonderful awesomeness. Low-information voters won’t look past the surface to see that the jobs numbers have been cooked, and some might decide to vote for Obama as a result.

Keep an eye peeled.

The Sayonara Zone

How bad must things get for a first term president (or the nominee of a two-term president’s party) before he’s in serious danger of losing his next election? How can we quantify “bad?”

I decided to scatterplot the presidential approval ratings tracked by Gallup against the infamous “Misery Index” — U-6 Unemployment plus the current annual inflation rate — culled from statistics collected by the U.S. Bureau of Labor Statistics. The data points I plotted were from the last dates surveyed before each Election Day. Here’s what I found.

The Sayonara Zone

Uh-oh. I’d say President Obama is solidly inside The Sayonara Zone on the chart.

Unemployment 101

Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: “There are three kinds of lies: lies, damned lies and statistics.”

Mark Twain

When you see a cheery report like this …

… what they’re talking about is the official unemployment rate for the United States.  Economists identify that particular statistic with the dry title of “U3.”

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.

U.S. Bureau of Labor Statistics

Unfortunately, that U3 number can be misleading.

Here’s a simplified way to visualize the economy when it’s as close as it ever gets to “full employment.”  The best America can typically do is when that U3 number drops to around 5% — five out of every hundred people in the workforce have no jobs.  Even when the economy’s booming that statistic never drops to zero because there are inevitably at least a few people who find themselves between jobs.  It’s not always the same people, and sometimes they’re between jobs for good reasons (on vacation between jobs, going to school, on sabbatical, just sold their business, etc.), so it’s silly to get upset if the U3 number hovers in the neighborhood of 5%.  Also remember that this doesn’t represent the whole population of America; we’re only looking at the workforce.  We’re leaving out retirees, the disabled, illegal aliens, children too young to work, and the like.

5% unemployment
5% unemployment

Now let’s say a big recession hits.  Ten out of every hundred people of working age find themselves out of work, so unemployment rises to 10%.

10% unemployment
10% unemployment

After a long time passes, the federal government announces that unemployment has dropped to 8%, and the TV talking heads eagerly parrot that latest U3 number.  Good news, right?

Not necessarily.  True, it could mean that now only eight of every hundred workers is out of a job, which is easy to assume when you hear that happy “news” report:

8% unemployment
8% unemployment

On the other hand, it could mean that the government designated a large chunk of the working age population (in our example, 37½%) as “discouraged workers” who have left the workforce.  Such sleight-of-hand leaves eight of every hundred people still in the workforce counted as “unemployed” according to the definition of that well-known U3 statistic, but it hides the full story.

8% unemployment (technically)
8% unemployment

Discouraged workers might be working part time, or they’ve stopped looking for work, or they might still be looking but they’ve been unemployed for so long that the government number-crunchers simply treat them as if they don’t exist anymore. Whatever the mix may be at any given time, those people are still of working age and they’re able-bodied, but they don’t show up in the U3 number reported as the official unemployment rate on the nightly news.  This situation is worse than the reports would have you believe.

bullshit detectorTo get an accurate picture of how big a chunk of the workforce is actually working, you have to flip things around and consider employment instead of just U3 unemployment and the raw “XXX jobs created this month” announcements.

You have to look at different government figures if you want the whole story.

The next time you hear a happy jobs report in the news, turn on your B.S. detector and compare our current situation to other recessions and recoveries in American history.

Or at least ask whoever’s sprinkling fistfuls of U3 sunshine to explain this double standard:

Bush's jobless recovery

Unemployment is still awful

Here’s an updated version of something I put together by combining the Employment-Population Ratio (because the unemployment rate you hear reported in the news doesn’t account for discouraged workers), along with a visual representation of which party controls the Presidency, the Senate, and the House. The data starts in January, 1948 and ends in March, 2011.
Click on the graphic below to see it at full resolution.
Employment-population ratio
That horrible nosedive on the right is what you get when you put the modern Democrats in charge of all three. And here I was, thinking the Carter years (1977-1981) were bad.

Barack Obama is Jimmy Carter