"Statistics don't lie, but liars use statistics"
-Dr. Harrington
Judging from today's report the economy is back being a job creation machine.
U.S. employers added 274,000 workers in April, 100,000 more than economists expected, as companies shrugged off higher oil costs and bet the economy will bounce back from a first-quarter slowdown.
The Labor Department today also boosted its initial estimate for job growth in March and February by a combined 93,000. Incomes rose more than forecast and employees worked longer hours.
However, reality is something different.
The Bureau of Labor Statistics cannot call every employer, nor know how many people are self-employed. So they use various "adjusting". Most of you are probably already familiar with "seasonal adjusting".
For instance, if you remove seasonal adjusting then the number of Americans employed drops by 160,000. And the size of the entire labor force drops by 488,000. Obviously people who don't show up in the labor force numbers also don't show up in the unemployment numbers.
There are also alternative ways of measuring unemployment that could spawn an entire discussion in itself.
But those aren't the reasons why I created this diary.
The reason I wrote this today concerns what is known as the Birth/Death Model.
The Birth/Death Model is basically a mathematical guess at the number of businesses that are "born" and "die" during a given month. There is no numbers that will back up these assumptions since the Model was designed to pick up job creation/destruction that happens outside of any survey. (see link for more information)
Obviously with nothing but theory to go on, these numbers can be totally wrong and no one dispute it.
So how many jobs were "created" last month via the Birth/Death Model? 257,000
You read that right. About 90% of all jobs "created" last month were accounted for by a mathematical guess!
In March the BLS reported that 110,000 jobs were created. The Birth/Death Model accounts for 179,000 of those jobs.
Given those kinds of numbers why would anyone believe employment numbers the Administration releases for public consumption?
[note: this is a repost because I think this diary vanished from the list too quickly and is too important to go unnoticed.]