Saturday, October 6, 2012

An October Unemployment Surprise: Putting the BS in BLS

Mirable dictu. Just in time to impact the election, the Bureau of Labor Statistics reports that the Obama economy is not merely showing some signs of life, but is in the midst of a miraculous recovery. The BLS claims that, while only 114,000 jobs were added in September, the U-3 unemployment rate dropped from 8.1% all the way down to 7.8%. Morning Joe on MSNBC laid out clearly why these numbers just don't add up.

Make no mistake, this is still a horrid number, but it is the first time the economy has had a U3 unemployment figure below 8% during Obama's term. The left is in full squawk mode, hailing this as a sure sign of the success of Obama's economic policies and Obama is warning against any attempt to criticize this number by "talking down" the economy. If you can stomach it, watch the first few minutes of this from MSNBC yesterday:

History teaches that, with an economy growing at an anemic 1.3%, we are going to see stagnant or declining job growth - and indeed, 114,000 jobs added in September (per the BLS's large scale institutional survey) is actually well below the approximately 150,000 new jobs needed just to keep even with the growth in our job market. It is what we would expect with this level of GDP growth.

And yet, in a separate Household Survey (see discussion of the two surveys at Hot Air) that the NLS uses to calculate the U-3 unemployment rate, the BLS is showing job growth of 837,000. The last time our nation saw job growth like that, it was under Reagan when GDP was growing at 9.8%. It is simply impossible to reconcile the the Household Survey number either with September's Institutional Survey, or with historic economic reality.

This has a distinct odor of corruption, cf cooking the books. That said, it is possible that this is really the mother of all coincidences - that in the month before the election, with jobs being the central issue, the BLS Household Survey really did come up with an outlier - a number not cooked, but wildly wrong nonetheless. Charles Krauthammer explains:

Going beyond that, even if we assume the Household Survey number of 837,000 new jobs in September is correct, it does not change the reality of our economic distress. It does, however, greatly muddy the water and makes Romney's job, during the next critical month, of explaining economic reality to Americans that much harder.

Note that the September 2007 BLS report, before the recession, showed unemployment at 4.7% and a labor force participation rate of 66%. This September's report showed unemployment at 7.8% and a labor force participation rate of 63.6%. Note also that we are an expanding nation. Some 200,000 new people enter the potential work force each month - thus we need to be creating about 132,000 new jobs each month just to keep unemployment where it is at the time. What that means is that Obama would have needed to have created, from Feb, 2009 through Sep. 2012, approximately 6 million new jobs just to keep up with the increasing work force. But on top of that, we lost 8 million jobs during the recession that lasted from Dec. 2007 to June, 2009. So for Obama to have led us to a full recovery, he needed to preside over the creation of about 14 million new jobs.

That takes a long time for someone to explain. It is much quicker for Obama to claim "5.2 million new jobs" under his watch and 837,000 jobs in September. Therein lies Romney's challenge.


The Elephant's Child said...

Robert Gibbs this morning on one of the Sunday shows, said he was shocked, shocked, that anyone would think that the administration had manipulated the jobs numbers — yet the truly shocking thing is that so many would believe that possible because of the constant lawless actions of this administration. We expect them to cook the books.

GW said...

Well said.