Tuesday, December 08, 2009

Unemployment Numbers Manipulated?

TrimTabs’ estimates that 255,000 jobs were lost in November, while BLS reports a job loss at only 11,000. TrimTabs employment analysis uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth.

The US Bureau of Labor Statistics (BLS), on the other hand uses a birth/death model of small business creation/contraction, far less reliable as it does not take into account anyone who has not searched for a job in the last four weeks. In other words, due to poor economic modeling the government had overstated job creation by an average of 70,000 a month.

Eventually the government catches up, but it's a day late and a dollar short, because "eventually" can can mean anything from next month to 1-2 years down the road. But the stock market trades on the statistics reported the minute it receives the news.

What does this mean? Hundreds of billions, if not trillions of dollars worth of stock change hands based on the information it receives, regardless of its accuracy and considering the activity and results from the stock market largely determine how we assess economic health, along with gross domestic product, the veracity of unemployment statistics can be very important.

So, in a nutshell, the reported "health" of our economy is determined, not by the reality of its circumstances, rather an illusion, projected by the masters of manipulation in Washington and on Wall Street.

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.

Meanwhile, the Bureau of Labor Statistics (BLS) reported that the U.S. economy lost an astonishingly better than expected 11,000 jobs in November. In addition, the BLS revised their September and October results down a whopping 203,000 jobs, resulting in a 45% improvement over their preliminary results.

Something is not right in Kansas! Either the BLS results are wrong, our results are in error, or the truth lies somewhere in the middle.

We believe 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.

Seasonal adjustments are particularly problematic around the holiday season due to the large number of temporary holiday-related jobs added to payrolls in October and November which then disappear in January.

In November, the BLS revised their September and October job losses down a surprising 44.5%, or 203,000 jobs. In the twelve months ending in October, the BLS revised their job loss estimates up or down by a staggering 679,000 jobs, or 13.0%. Until this past month, these revisions brought the BLS’ revised estimates to within a couple percent of TrimTabs’ original estimates. Charles Biderman, founder and CEO of TrimTabs Investment Research,

Links: Jobs Contract 23rd Straight Month: Unemployment Rate Drop Map of Banks that went Bust


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