FICTION
The writing's on the wall as far as March unemployment numbers are concerned. We'll be told by our government (via Bloomberg.com) that
unemployment has increased to approximately 8.5% on Friday. That's nothing short of a crock. It's actually around 18% (more about this, below). While most of the numbers we're now hearing from our government--about almost everything--are little more than fiction, nothing disturbs me more in this regard than the spin we're hearing parrotted by the MSM when it comes to our nation's unemployment statistics.
SOME FACTS
Five million fewer people are employed now than just 16 months ago.
If you do the math, that's easily 1.5 million more souls than the projected (best-case scenario) 3.5 million people that will be put to work over the next two years by President Obama's stimulus package. And, this doesn't account for others that will lose their jobs over the next two years, as well. Add another million more from the potential bankruptcies of GM and Chrysler (it's not just GM and Chrysler employees that'll be out of work if those automakers go down the tubes, it's all of their suppliers and servicers, too), and it's quite bleak.
From Bloomberg (see link, above):
Unemployment jumped to 8.5 percent from 8.1 percent in February, according to the median estimate of analysts surveyed by Bloomberg News before the Labor Department's April 3 report. The figures may also show payrolls fell by 660,000 workers, bringing total job losses since the contraction began to 5 million.
The numbers the government highlights are the US Department of Labor's Bureau of Labor Statistics' "U.3" numbers, which are, for all intents and purposes, meaningless. (I realize a few bloggers have explained this in recent weeks; but, it bears repeating.) What matters is the "U.6" report. Here's why (NOTE: This quote is from 4-1/2 years ago), courtesy of John Williams over at his Shadow Stats website:
Employment and Unemployment
August 24th, 2004
"GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE
SUSPECTED BUT WERE AFRAID TO ASK!"
A Series Authored by Walter J. "John" Williams
"Employment and Unemployment Reporting"
(Part Two in a Series of Five)
August 24, 2004
...The popularly followed unemployment rate ... is known as U-3, one of six unemployment rates published by the BLS. The broadest U-6 measure ... [includes] discouraged and marginally attached workers.
Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.
The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities. Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends.
Williams explains in his latest "Flash Update" why the numbers for March--regardless of what we're told this Friday and regardless of whether we're talking about U.3 or U.6 measurements--are actually, significantly worse than what the government had stated about our nation's unemployment in January and February:
--Conference Board reports on help wanted advertising...
February newspaper help-wanted advertising (Conference Board) held at its historic low level for a third month, with year-to-year change on a three-month moving average basis down by a record 44.6%. The deepening annual fall-off in online help-wanted advertising (Conference Board) also continued, down 36.0% year-to-year in March, versus an annual decline of 34.3% in February.
New claims for unemployment insurance have continued to surge, with the 17-week moving average up by 71.1% as of March 21st (the highest since the 1975 recession), versus 64.7% as of February 21st.
As Williams has explained it to his readers over the last few years, the numbers continue to get more heavily "massaged" with every new monthly report. As far as unemployment is concerned, in 23 of the past 24 months, more dire "revisions" to the previous month's numbers are conveniently buried in notes regarding stories of the current month's report. Williams explains that this is true of almost all government numbers of late; it's not just the unemployment stats.
Williams' most recent information is available by paid subscription only; but everything other than the past few months' of his work is shadowstats.com available for free at his website.
"SEASONALLY ADJUSTED" NUMBERS
In the latest "Shadow Stats' Flash Update," on which I report, above, Williams enlightens us to the fact that the actual net joblessness--without the "seasonal adjustment" spin--for March is around 750,000, not 650,000+/-.
But, Alan Abelson, from Barron's Magazine, has also made some statements this week about our government's penchant for "seasonal adjustments"--across the board--wherein he repeats comments from Merrill Lynch's David Rosenberg:
...The misleading figures cut across a wide swath of the economy, encompassing housing, manufacturing, employment -- you name it. The leading agent of deception, unintentional or otherwise, has been that old sly villain, seasonal adjustment. As it turns out, the seasons don't need adjustment as much as the adjustors need seasoning...
--SNIP--
...the official keepers of the books have been unusually aggressive in constructing seasonal adjustments for February's economic data.
--SNIP--
To illustrate, the seasonal adjustment for new-home sales was the strongest since 1982; for durable-goods orders, the strongest since they were first released in 1992; the retail-sales figures for February were flat (or, as David says, flattering) after such adjustment, but unadjusted fell 3%, the biggest drop on record. He also notes dryly that the 40,000 raw non-seasonally adjusted housing-start total for February "all of a sudden becomes a headline-adjusted annual rate figure of 583,000."
Which makes David think that come the inevitably sharp downward revisions of such distorted data, first-quarter real GDP is likely to suffer a 7.2% drop. Which, together with the 6.3% skid in the fourth quarter of 2008, would be the worst back-to-back contraction in the economy in 50 years.
AND, SOME REALLY INCONVENIENT TRUTHS
Next-to-last, but not least, as Bloomberg. com reminds us:
Should [the "recession"] persist into April, the now 16-month recession would surpass similar contractions in the early 1970s and 1980s as the longest since the Great Depression. The magnitude of the current slump is still an open question.
The reality today, however, is that--despite hearing over the next few days about how 'joblessness is the worst it's been in 25 years'--at 18%, unemployment's already at levels not seen in this country since the 1930's and 40's. And, in states like Michigan and South Carolina, when one factors in actual BLS' U.6--as opposed to U.3--numbers, at least according to key Obama economy advisor Austan Goolsbie's extrapolation of certain unemployment statistical truths, one realizes that unemployment is actually almost as bad now in some areas of our country as it was during the height of the Great Depression, when it reached 25%.
I hope folks will remember this on Friday when they hear about our nation reaching '8.5% unemployment,' with that level being 'the worst it's been in 25 years.' Millions of Americans--especially those in states such as Michigan and South Carolina--would beg to differ.