Blog

May Employment Report Not Believable

Friday, June 5, 2009, 8:51 AM

Well, I thought that I had seen some fantastic data manipulation in the past, but today's release of the May employment report by the BLS was a real keeper.  It is one for the books (the forensic accounting books, specifically).

Here's the news:

NEW YORK (CNNMoney.com) -- Job losses slowed dramatically in May, according to the latest government reading on the battered labor market, even as the unemployment rate rose to a 26-year high.

Employers cut 345,000 jobs from their payrolls in the month, down from the revised 504,000-job decline in April.

What spectacular news!  Stock futures vaulted, gold killed, the dollar rebounded - all in all a very favorable set of market outcomes that are certainly welcome in the marbled halls of DC and on Wall Street.

The problem is that this huge surprise to the upside is completely out of line with other sources of data and depends (once again) on an incredibly suspect boost from the Birth-Death Model.  Let's start there.

In the chart below, you are looking at the number of jobs that the BLS has "modeled" to have been created.  These are either added to or subtracted from the total that is reported and trumpeted across the financial-media spin machine.

I want you to note the blue arrows, which reveal that 43,000 construction jobs were somehow added in the month of May, along with 77,000 "leisure & hospitality" (hotels and parks and such) jobs and even 7,000 financial services jobs (I bet there are more than a few banking industry folks wondering where those might be!).

All told, this resulted in 220,000 jobs being added to the reported number, which came in at 345,000 where 520,000 were expected.  This is an enormous improvement of +175,000 jobs over the expected number; the only problem is that 220,000 of these jobs cannot be counted, touched, or verified, as they were modeled.

Now I don't know about you, but in my neck of the woods, this year is much darker on the job front than last year.  Every piece of data I am reading suggests that this is a national phenomenon.  How many jobs were "modeled" and added last May?  Only 176,000.  So we might ask ourselves, again, what sort of a model is it that can find a way to add 25% more jobs this May than last May?  What exactly are the inputs that feed this model?

One clue can be divined by looking at this chart of past Birth-Death job additions for the month of May, stretching back to the start of the decade.

Looking at the chart above, we might note that the Birth-Death model ramped up its additions from 2000 to 2004 and now seems "pegged" in a very narrow band.  Equally odd is the observation that the model's output is impervious to both growth and recessions.  Even more oddly, we might note that over the past ten years it is this May that has the highest modeled "addition" of them all.  How does this jibe with your sense of things?  Do you feel dizzy when you try and compare your experience with this data?  That dizziness is due to cognitive dissonance.

Another private source for employment data comes from ADP, which is a payroll processing company that services a very large number of businesses.  I haven't been the biggest fan of the ADP data, especially since they started revising their methods to more closely track the BLS releases. 

As Barry Rithotz so accurately put it a while ago:

ADP has their own proprietary data sources; they track employees (new and existing), they can track payroll dollars (total gains and losses, and per employee changes), off of the actual payroll checks going to employees. Why try to imitate the BLS output each month? ADP can create a very specific set of reports that ARE PURELY DRIVEN BY THEIR OWN PAYROLL RECEIPTS, that stands on its own.

Why even bother messing around with trying to imitate or forecast BLS data?

The BLS Non-Farm Payroll numbers are somewhat flawed, subject to massive revisions, and fatally flawed due to how the Birth Death adjustment has been applied.

If ADP wants to contribute something valuable, they should stop trying to forecast BLS, and instead generate their own, proprietary, data driven monthly NFP numbers.

With that said, here was the ADP estimate for May:

The ADP National Employment Report

May, 2009

Nonfarm private employment decreased 532,000 from April to May 2009 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from March to April was revised by 54,000, from a decline of 491,000 to a decline of 545,000.

(Source)

The interesting part is that the ADP number does not include government workers, so I would have expected the BLS release (which does) to have tracked lower, not higher, than the ADP data.  I say this because every state I have looked at has either cut or frozen government jobs.  Yet the BLS report estimated that only 7,000 government jobs were lost across the entire country, which is mysterious, since quite a few of the temporary census jobs were terminated in May.  

And not just a few either:

TOWNSHEND, Vt. (AP) -- For weeks, Greg Noel roamed the spine of the Green Mountains with a handheld GPS unit, walking dirt roads and chatting with people as he helped create a map of every housing unit in the United States.

Work was good: The sun was out, the snow was gone and the blackflies hadn't begun to hatch. But now that work is over and Noel, 60, and more than 60,000 other Americans hired in April to help with the 2010 census are out of work once more.

(Source)

Given that 60,000 temporary census jobs went away, I am at a loss to figure out how all the other government hiring and firing collectively added up to a 53,000 job gain to secure the final -7,000 reading.

As before, my assumption is that these numbers are quite fuzzy, not worth the paper they are printed on, and heavily falsified to achieve narrow political and market influencing aims.

While I can certainly understand, and even find some compassion for, the desire to manipulate the data to inject some confidence and optimism into the populace and markets, I must regretfully conclude that such efforts are more damaging than helpful.

We did ourselves no favors by fibbing to ourselves during the blowing of the credit bubble, and we do ourselves no favors by repeating that behavior now.  We need good and believable data.  I judge that our markets would respond better in the long run to believable data, and that we actually owe it to ourselves to provide the most honest and accurate assessments of reality that we can.

Related content

40 Comments

jms2112's picture
jms2112
Status: Member (Offline)
Joined: Sep 4 2008
Posts: 14
Re: May Employment Report Not Believable

Thanks for the good info.  When you hear these reports (the gov employment reports) you just say to yourself "what the ????', how do they come up with this???

And the spin is infuriating!  ....BETTER THAN EXPECTED....  Yahoo!  We're saved....  Ugh.

Can someone explain briefly what the 'birth-death' model is?  I did a quick Wikipedia search and Google search and did not come up with anything useful.

Thanks, Jim

SteveS's picture
SteveS
Status: Gold Member (Offline)
Joined: Sep 6 2008
Posts: 358
The less bad is the new good

I have a couple headline/top story Google Gadgets on my browser home page. This morning I noticed two headlines in particular:

Good News On Jobs - Forbes.com

and

Jobless Rate Hits 9.4 Percent in May; Layoffs Slow - washingtonpost.com

And I'm thinking "Good News - 9.4% unemployement" ? Turns out both stories were nearly identical once past the headline. The next thought was "I wonder when Chris will comment on this?". Didn't take long. So not only is the data bad, but Forbes thinks even the 'rosy'  9.4% is good news.

Thanks for pulling the curtain back again Chris. When do we get this month's manufacturing and housing 'data'?

HarryFlashman's picture
HarryFlashman
Status: Bronze Member (Offline)
Joined: Aug 1 2008
Posts: 30
Re: May Employment Report Not Believable

Thanks for that Dr Martenson,

Ive been watching CNN here in Japan with mounting incredulity for the last few hours and really appreciate your confirming of my fears.

The real thing that I dont  understand is how the unemployment rate can jump 0.5% when the number given doesnt match this jump.Anyone????

emhswm's picture
emhswm
Status: Member (Offline)
Joined: Nov 5 2008
Posts: 20
Re: May Employment Report Not Believable

birth/death ?

either you have a job or you don't....if dead, presumably you don't have a job -- (though you can still vote )

don't understand the application...or its a poorly named 'statistical smoothing' method.

TW

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

Hey Jim:

The Birth Death hypothesizes how many jobs were created by companies too new and/or too small to participate or be found.

The "model" [really big lie] was created in 2003 I believe.

IMHO the BLS is an acronym for Bureau of Lying Statistics. Since my first visit to CM's site in the early summer of 2008 it became apparent to me that people are basing their investment activity on really, really, really bad data and IMHO I think this is why Soros is so correct when he says the markets are always wrong.

I don't have TV but if I had to take a stab at it my bet would be that CNBC is blaring this job report touting improvement in the job sector today. The clients I visit today won't have CNBC in their office, so sad, too bad I could use a chuckle.

Chris: I thought this was interesting, Hotel Occupancy Rate Falls to 51.6%

When looking at the sector they chose to hypothesize the most job growth for I just scratched my head.

Take care.

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: May Employment Report Not Believable

At first when Obama came to office it seemed he could care less about the market but now it seems they will twist what ever to make it go higher? More job losses in the Midwest where I live & people telling me no one is hiring?

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 3507
Re: May Employment Report Not Believable

Good find, Davos.

Yes, it is a mystery how the Birth-Death model can fantasize hypothesize 77,000 leisure and hospitality jobs, given the near-historic drop off in hotel occupancy (second only to post-9/11).

I'm no government modeler, but in my model, I would have factored in hotel occupancy as one of my variables.

In year-over-year measurements, the industry’s occupancy fell 11.1 percent to end the week at 59.4 percent.

Even funnier is that when I first went to a Bloomberg article on this subject, I found this:

June 5 (Bloomberg) -- U.S. stocks retreated, erasing an early advance, amid skepticism that a better-than-estimated report on payrolls signals that the worst of the recession is over.

“People are coming around to the realization that the payroll report wasn’t all that good,” Dan Greenhaus, equity analyst at Miller Tabak & Co., said in an e-mail. “There are, as always, questions surrounding the birth-death model estimations and as that talk continues, people are focusing in on the unemployment rate and the other negative parts of the report.”

(source)

Yay!  I thought.  Finally, some mainstream questioning of the Birth-Death model.

Unfortunately, that article has been "modified" since the release, and now reads like this (see if you can spot the not-so subtle differences):

June 5 (Bloomberg) -- U.S. stocks rose, sending the Dow Jones Industrial Average higher for 2009, as data showing employers cut fewer jobs than forecast last month boosted optimism the recession is ending.

“It’s a heck of a lot better than almost anyone was expecting to see,” said Douglas Cliggott, the Greenwich, Connecticut-based money manager whose $83 million Dover Long/Short Sector Fund beat 97 percent of peers last year. “Clearly lots of people want this market to go up. They’ve gone long and they don’t want this party to stop.”

(source)

Yikes.  Maybe it's just me but I see an enormous difference between those two versions. 

In case anyone is wondering if I am somehow making this up, I assure you I am not.  Luckily, I can still search the original text of the article in Google, because it has not yet refreshed its cache.  Here's an image I just snapped off of Google of the article in question:

As you can see, the original wording of "skepticism" and the birth-death are all in there, (but are clearly no longer in the article).  Most aggravatingly, there is no indication that the article has been seriously altered.  Usually there is at least an "Update" warning.  Took me a while to figure out that what I was seeing was real-time content-swapping to reflect an entirely different set of views from the original.

I think it's important to track the ways in which media seeks to manipulate impressions and convey opinions and beliefs under the guise of objective reporting.

Oh well, at least the mainstream media expressed some skepticism about the birth-death model, even if only for a few minutes before it got yanked and replaced with a diametrically opposed statement of optimism and belief. 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

IMHO this is criminal. The BLS is contributing to malinvestment, they are hurting those who are educated investors.

One more reason that I'm thankful I found Covel's site and use trend following, if one is going to invest in this "enviornment" reason has been clearly replaced with bogus statistics and a media conduit to the sheeple investors.

Map

I can't find the link but there was a better shot at how many job seekers there were and how many people were hiring.

Maddening!

The numbers can't be conned, stuffl like this will prolong the agony and add impact to the crash. Absolute insane asylum.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

 From Nate's site:

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

Chart of U.S. Unemployment

Nichoman's picture
Nichoman
Status: Gold Member (Offline)
Joined: Nov 1 2008
Posts: 420
Re: May Employment Report Not Believable

This drives toward asking two basic questions.

  1. How long will the divergence from manipulated "data" and reality finally become apparent to society?
  2. What will be reaction of our society?

Here's my take...

  • Empirical comparisons of these data differentials the past several months from copious data sources from past several decades...offer...if this continues...suggests it will be less than 6 months...possibly 3 months or even less.
  • Coupled with flawed expectations in financial industry (stocks unrealistic future PE...runaway debt, etc)...we will experience unprecedented instabilities in our societies.  Essentially a crisis in credibility of sobering proportions.

Last 6 months of this year could be truly historic...but not for reasons any of us will welcome.  All these differentials are so large combined with trends...many of a exponential nature (i.e. our debt, etc) the changes could be remarkably rapid and severe...or of a non-linear nature as well. 

If correct...are we ready mentally and emotionally beyond just the physically? 

Nichoman 

isaachandler's picture
isaachandler
Status: Member (Offline)
Joined: Apr 22 2009
Posts: 2
Re: May Employment Report Not Believable

I understand the data manipulation arguement, but since they were manipulating the data the same way last month doesn't the data still reflect an accurate trend.  Isn't the employement picture less bad this month than last month, even if the absolute number of unemployed are skewed?

I notice the UDS is rebounding a bit today.  Anyone care to comment on what might be going on the the $.

Thanks,

Ready's picture
Ready
Status: Platinum Member (Offline)
Joined: Dec 30 2008
Posts: 914
Re: May Employment Report Not Believable

isaachandler wrote:

I understand the data manipulation arguement, but since they were manipulating the data the same way last month doesn't the data still reflect an accurate trend.  Isn't the employement picture less bad this month than last month, even if the absolute number of unemployed are skewed?

You are assuming they are skewing the data in a linear fashion. Look at the B/D chart in Chris' original post that shows the manipulation is the worst ever this month. The maniuplation is "getting worse faster" to turn it around on them!

Rog

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Re: May Employment Report Not Believable

In an article I read today the author suggested taking the L out of the BLS Data to make it a more accurate representation of it's value.

jmcguire.sf's picture
jmcguire.sf
Status: Member (Offline)
Joined: Apr 21 2009
Posts: 2
Re: May Employment Report Not Believable

Bravo Chris and Davos!

I couldn't believe the spin cycle this morning.

RNcarl's picture
RNcarl
Status: Gold Member (Offline)
Joined: May 13 2008
Posts: 358
Re: May Employment Report Not Believable

well,

I'd say..... October.

I am starting a pool with some friends as to the month the bottom really drops out.

My vote is for October.

Why?

Lots of "black October" stuff happens then based off of earnings reporting yes?

But, with the manipulated numbers....???

My death watch month is October.

FWIW - C.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

Hello isaachandler:

 From Nate's site:

Map

Context overall by year 

But really, I personally fail to see how 6 figure monthly job loss numbers, adultered or unadultered, are a good sign of anything. 6 figure job loss numbers are not normal and are not a sign of an economy, let alone a healthy one.

IMHO until that changes there can not and will not be an economy. The new good news IMHO is totally taken out of context.

Ready's picture
Ready
Status: Platinum Member (Offline)
Joined: Dec 30 2008
Posts: 914
Chris' comments showing up on MSN

Not sure if you care, but your post from this morning was copied (and credit given) on the MSN boards:

http://moneycentral.msn.com/community/message/thread.asp?board=MarketTalkWithJimJubak&ThreadID=1138392

Seanj360's picture
Seanj360
Status: Member (Offline)
Joined: Sep 9 2008
Posts: 7
Re: May Employment Report Not Believable

Davos,

As always thanks for the great content...you mention Covel's site?  Could you post the link for trend following if you have a chance?

Thanks!

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

 Hello Chris:

I got click happily passionate with this thread and totally missed, until a second ago (your post on Bloomberg.)

OMG! Man oh man, that could be a thread/article/feature in and of itself.

Thank you, that was a nugget. Thank you for this report (May Employment not Believable), really, really superb.

SeanJ360: Thanks but I'll defer/pass on those thanks towards Chris, I'm just the cut and paste dude who reads entirely too much since I don't have a boob tube. Mike's site is here

His new book Trend Following is super, he has a movie, you can find the trailer there as well. If I'm not mistaken I've been told there are some serious trend followers who trade more than I do on this site, you might want to email Cat and Dogs, I think that is who I was told in a post eons ago do this.

Take care

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Re: May Employment Report Not Believable

For Investors, Better-Than-Bad No Longer Good Enough

http://www.cnbc.com/id/31124949

Maybe some are catching on?

metalmongrel's picture
metalmongrel
Status: Bronze Member (Offline)
Joined: Oct 7 2008
Posts: 38
Re: May Employment Report Not Believable

I don't post much here, but I read all the daily posts and must say that this concrete evidence of censoring of our media is astounding. 

The only thing I don't really understand is that there is SO much incentive for the average joe who works at one of these major media outlets such as this to expose these cover-ups.  I'm sure other papers and media outlets from around the world would pay that person gobs and gobs of money for the exclusive story during which these lies are exposed.  I'm very surprised that this hasn't happened already.  Humans are humans, if someone was offered hundreds of millions of dollars and protection in exchange for evidence of this story, I'm sure there would be many takers. 

The_Black_Death's picture
The_Black_Death
Status: Bronze Member (Offline)
Joined: Jan 22 2009
Posts: 33
Re: May Employment Report Not Believable

I just heard the news on CNN and had to come here immediately and get Dr. Martenson and Davos' take on this.

Let me just say, you guys never disappoint.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2491
Re: May Employment Report Not Believable

RNcarl wrote:
well, I'd say..... October. I am starting a pool with some friends as to the month the bottom really drops out. My vote is for October. Why? Lots of "black October" stuff happens then based off of earnings reporting yes? But, with the manipulated numbers....??? My death watch month is October. FWIW - C.

RNCarl -

October is always a safe bet for market meltdowns (I think what we have witnessed of late is little more than a market thaw but the ice jam is about to let go big time).

"Markets In Motion" by Ned Davis does a superb job of graphically illustrating market performance going back many decades.   If you line up each year that a major market "crash" occurred the shape of the curves are nearly identical, and they almost always occurred in October.  Very rarely has a crash occurred in a month other than October.

There are a few more dynamics other than earnings that drive the likelihood of October failures - actually earnings is historically a positive or neutral piece of news.

I think you have a lock on the pool if you take October.  Barring completely unforseen events, I'll be in puts sometime mid-September.

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2491
Re: May Employment Report Not Believable

Nichoman wrote:

<snip>

Last 6 months of this year could be truly historic...but not for reasons any of us will welcome.  All these differentials are so large combined with trends...many of a exponential nature (i.e. our debt, etc) the changes could be remarkably rapid and severe...or of a non-linear nature as well. 

If correct...are we ready mentally and emotionally beyond just the physically? 

Nichoman -

That's exactly why you have to market neutral to be able to successfully trade the market.  Trade what the market is doing, not what you want it to do.  The last 6 months of the year could not only be historic, but also present rarely seen profitable trading opportunities - but only if one is market neutral.

Up or down - I really don't care, just move. 

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: May Employment Report Not Believable

isaachandler wrote:

I understand the data manipulation arguement, but since they were manipulating the data the same way last month doesn't the data still reflect an accurate trend.  Isn't the employement picture less bad this month than last month, even if the absolute number of unemployed are skewed?

I was wondering the same thing. I understand that the manipulation isn't linear, but I'd like to see a year's worth of unfuzzied numbers to see if they are actually changing the trend or if the real numbers would also look pretty bell-shaped. I know its the highest adjustment yet for May, but is it significantly higher enough to actually change the trend?

Shadowstats figures follow the govt-reported trend.09

gyrogearloose's picture
gyrogearloose
Status: Gold Member (Offline)
Joined: Sep 8 2008
Posts: 480
Re: Chris' comments showing up on MSN

Good spotting Ready

and in there this graph.......

Graph of year over year BLS job creation, what a hoot........

Cheers Hamish

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

This isn't a years worth but it shows you unadultered unemployment number are getting worse month by month. Take care

 From Nate's site:

jeffjohn79's picture
jeffjohn79
Status: Member (Offline)
Joined: Apr 13 2009
Posts: 1
Re: May Employment Report Not Believable

Chris,

If you have a Bloomberg terminal you can see each version of the story.  This happens all the time with economic data.  If the market opens up, the first version of the story signals optimism and positive reaction to the data.  If the market turns, the same story is revised with changes like you point out above.  Today, we were up, then down, then up again...Thus the multiple changes in tone.  I'm not saying this isn't important, but CNBC and BBG do this every week.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

Hello MentalMongrel:

There was a day, I think the 25th and 26th of May where stuff was leaking about this. If you watch this (gets interesting at the 2:36 minute point), until Mr. Fundamentals (who IMHO probably doesn't knw much about them) cut the guy off.

You can go to Covel's site and look on one of those days there, IMHO is another, less clarity and some suspect the guy could be, well...

But I agree with you, I have no idea why, other than maybe ignorance, late to wake up, still sleeping or just happy to have a job and knows Mr. Big pays his paycheck with advertising dollars.

Take care

PS IMHO it is going to get really apparant, really soon as they move to protect the USD. I don't know CM's view, I'm just a cut and paste guy, he is the thinker, but I think there is one thing [USD] standing between us and us being a bananna republic. I think they will move heaven and earth to hang on to that as long as possible.

Ray Hewitt's picture
Ray Hewitt
Status: Gold Member (Offline)
Joined: Apr 5 2008
Posts: 458
Re: May Employment Report Not Believable

As crazy as it sounds, I'm not so sure the BLS thinks they are dishonest. From Obama on down, they think they are creating reality. Their objective is to drive away the fears that they think are at the root of the downturn. It goes back to Roosevelt's, "we have nothing to fear but fear itself."

I see a self-serving motive for that way of thinking: they have to create the impression that they have matters under control. As soon as the masses believe they have lost control, their power ceases.

In either case, we can be sure the lying will increase as the depression worsens.

Mario Galante's picture
Mario Galante
Status: Member (Offline)
Joined: Oct 13 2008
Posts: 13
Re: May Employment Report Not Believable

Well, at least some people are not fooled. Please take a look at this article:

blogs.barrons.com/stockstowatchtoday/2009/06/05/market-reaction-hints-at-false-note-in-jobs-report/

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1501
Re: May Employment Report Not Believable

Since all employers must pay SS, Medicare and Medicaid withholding tax for each employee, it should be pretty easy for the government to count the real number of employed persons.  I know that would exclude self-employed, but so what?  You could just call it the non-farm, non-self-employed labor statistics.  The fact they don't use something that is already at their fingertips would lead me to believe they always want to have a way to skew the numbers, and keep their methods from being transparent.  

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1501
Re: May Employment Report Not Believable

Would love to see a monthly chart plotting the difference between the BLS employment report and the ADP report, going back, say 15 years.  That should tell us something. 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

Hello Patrick:

You might ask Jake to do that (in 2 weeks when he gets back from vacation), IMHO he makes the best charts!

http://econompicdata.blogspot.com/

Take care

vega101's picture
vega101
Status: Member (Offline)
Joined: Jun 1 2009
Posts: 1
Re: May Employment Report Not Believable

The way I see it - if one disregards the birth/death adjustment figures - then employment loss was greater in April/May then what is was in December/January (the so-called bottom) - green shoots eh.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: May Employment Report Not Believable

As you can see from the number of posts I've made, Chris's fine work bringing this to light has touched a nerve with me, one that I am most passionate about.

I call it the Enronesque Nerve. 

Here is another chart I stumbled upon and want to share. GDP Tanks & Birth Death CREATES More Jobs? (Chart from The Big Picture Blog)

Chris - thank you again.

When I want to check the 'split personality scale' --- markets and reality, or what Soros calls in some fancy word that just means the markets are always wrong, I go to my RSS iGoogle reader (of which I have share with a few here) and do a ctrl-f for a keyword. Today's was job.

Mainstream media feeds which fill up the bottom:

  1. Jobs Report Better Than Expected
  2. Debt prices lower after jobs report
  3. Oil touches $70 after jobs report
  4. The Day Ahead: Expect to See -520,000 Jobs Lost in...
  5. Cramer: Why 9.4% Unemployment Is Good

The blogoshpere which fill up the top:

  1. May Employment Report Not Believable
  2. Guest post: Payroll data mixed despite the bullish headline job loss figure
  3. THE HORROR, Bond Traders are White with Terror...
  4. Birth Death Adjustment Goosed NFP
Cycle9's picture
Cycle9
Status: Bronze Member (Offline)
Joined: Feb 10 2009
Posts: 31
Re: May Employment Report Not Believable

Last 6 months of this year could be truly historic...but not for reasons any of us will welcome.  All these differentials are so large combined with trends...many of a exponential nature (i.e. our debt, etc) the changes could be remarkably rapid and severe...or of a non-linear nature as well. 

If correct...are we ready mentally and emotionally beyond just the physically? 

I agree with your take.  I think this fall/winter is when things hit the fan hard.  The confluence of events is just too much to ignore.  Makes me want to buy some cheap farmland... hmm.

andydee's picture
andydee
Status: Member (Offline)
Joined: Jun 9 2009
Posts: 1
Re: May Employment Report Not Believable

I've taken the liberty to circulate this essay to a number of friends and have used it as the focus. (sometimes the only content), of my comments on a number of other blogger's sites.  This morning an article appeared on Seeking Alpha, an "Editor's Choice", I believe, "The Labor Market has Not Yet Signaled a Turning Point..."
http://seekingalpha.com/article/142040-the-labor-market-has-not-yet-sign...

The author, Jeffrey Frankel, is a member of the Business Cycle Dating Comm of the Nat'l Bureau of Economic which has responsibility for "calling the trough".  He, personally uses the rate of change of hours worked as his personal measure - his conclusion about the May report?

"...pursuing this logic leads to second thoughts about whether the most recent BLS announcement was really good news after all. The length of the average work week fell to its lowest since 1964! The graph below shows that not only did total hours worked decline in May, but the rate of decline (0.7%) was very much in line with the rate of contraction that workers have experienced since September. Hours worked suggests that the hope-inspiring May moderation in the job loss series may have been a monthly aberration. If firms were really gearing up to start hiring workers once again, why would they now be cutting back as strongly as ever on the hours that they ask their existing employees to work? My bottom line: the labor market does not quite yet suggest that the economy has hit bottom."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments