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Employment Data Saga Continued: Krasting Says Larry Summers Misstates; Stockman Says It Goes Deeper
David Stockman wrote this comment to the article by Bruce Krasting, "Larry Summers on the Labor Force Participation Rate". (See the summary video here.)
Employment Data Saga Continued: Krasting Says Larry Summers Misstates; Stockman Says It Goes Deeper
Courtesy of Wall Street Examiner
By David Stockman
Bruce – Great job on the Summers catch, but I’m wondering if this goes much deeper. I don’t particularly believe in tin foil hats, but all of these mainstream economists treat the BLS and BEA data like it’s holy writ—when it’s evident that the reports are so massaged, estimated, deemed, revised, re-bench marked and seasonally adjusted that any month-to-month change has a decent chance of being noise. What deep secret might they be hiding?
So on the labor force participation rate they say, “No it didn’t go down in January because the 2012 numbers are re-bench marked for the 2010 census,” but for some reason the BLS didn’t bother to update the 2011 civilian population numbers, including December. Thus, the BLS published apples-to-oranges numbers on this particular variable and the footnote says the December participation rate would have been the same as January, if they had revised it!
Yet on another variable— the establishment survey jobs count—they were also busy re-benchmarking–but here they did update the originally reported numbers for every month of 2011. Even then, it is hard to say what got updated because the originally reported numbers each month are then revised during the next two reporting months—with any excess or shortfall reallocated to earlier months outside the three month window, which are not published on a revised basis, even though they have been revised! This reflects a wacko thing called the concurrent seasonal adjustment method.
Anyway, like Summers did in his TV riff, you can always pick and choose a half dozen noise points in every monthly report to support your favored trend. But obviously, your point is that the longer-term trend of the labor force participation rate is really bad, and this truth is absolutely validated by the January report. Except it would have been equally bad in December had it been reported with the new census data. As Gartman says, the trend is from the “upper left to the lower right”, and it’s heading off the page.
But the mainstream narrative never gets to the trend. In this case, the plain fact is that we are warehousing a larger and larger population of adults who are one way or another living off transfer payments, relatives, sub-prime credit, and the black market. My suspicion is that this negative trend and many others like it get buried by the monthly change chatter from mainstream economists and on bubble vision, and that these monthly deltas are so heavily manipulated as to be almost a made-up reality. Call it the economists’ Truman Show.
The attached series for the “raw” or unadjusted establishment survey employment change for January goes back to the 1980s and makes me wonder. Since 2000, the January job loss against a December payroll of between 130 and 135 million has varied within a tiny range of about 150,000. Other than January 2009 when the economy was being smacked by the post-Lehman melt-down in the financial markets, this means that the unadjusted January payroll count declined within a super-tight range of 2.00% to 2.20% of the December payroll.
Really? Granted the U.S. economy is a regular fellow, but how could there be such astounding uniformity every January, year after year in the raw numbers, as in the following sequence for January 2001 thru January 2012, respectively: 2.16%, 2.19%, 2.05%, 2.03%, 2,03%, 1.96%, 2.03% 2.19%, 2.73% (2009 outlier), 2.20%, 2.18% and 2.02%.
After all, you have weather aberrations, huge fluctuations in year to year economic conditions, the weak, random nature of the establishment survey, the constant fiddling with the birth-death adjustment which is carried in the raw numbers, the Christmas shopping season variation from red hot-to-punk across the years, the timing of the survey weekand much more. And the dice always lands on almost exactly a 2.03% change from December. Right.
This is meant to be a long-winded encouragement to you to apply your patented numbers forensic skills to the monthly BLS reports or any of the other market movers. In the last 7 years, for example, the Christmas shopping season has been all over the lot and presumably, retail hiring, too. But the unadjusted retail jobs reduction in January vs. December has not varied by much more than 150,000 from a base count of 15 million. That’s a 1% variation, notwithstanding the huge shopping season differences they report on bubble vision.
In short, if you spend a little time with these numbers you will know that they are being made up. Funny thing that I remember during the depths of the 1982 recession, Reagan read in Human Events one night that the seasonally adjusted numbers were being manipulated and one should look at the unadjusted numbers, instead. The next morning during an economic update briefing Reagan said, he wanted to talk about the ”unadjusted” unemployment rate. Marty Feldstein turned white as a ghost, and then talked him out of it. Hmmm!
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A profound thanks to Tyler(s) and ZH for continuing, each month, to point out the farcial nature of the BLS employment statistics. I spent some time this morning on a private email to another ZH'er about this very subject. 50 years ago, I walked out of a university with a MBA in Industrial Relations and Personnel, so the BLS numbers are old friends. My point in the email, and here, is the the numbers are what they are - the BLS report is now 40 plus pages each month, and the MSM and most everyone else focuses only on the 'headline numbers' on the first page. But if you want to dig into both the numbers and the methodology, it's all in the report or on the BLS web site - the folks that put the report together ARE a bunch of statistics geeks, and the nuts and bolts of how they come up with the numbers are yours to find. The MSM (usually) never bothers to inform the sheeple that the number of additional non-farm payroll jobs 'created' are 'seasonally adjusted', as is the biggie - the unemployment rate (U-1); and what that might mean for what the REAL number might be. And what sheeple wants to think about it anyway - they either have a job or don't, anything remotely connected to math brings on a headache or, worse yet, a rapid channel change, and Dancing With The Stars is on next. And it is way non-PC to bring up U-6, which is there in the report a few pages in and continues to be a scary number.
You do not have to be a statistics geek or do much digging to get that the numbers are so diddled* with (technical term) as to require an entire shaker of salt to try to tease out some meaningful information from the noise. And the headline numbers are touted up by the BLS Commissioner (presently an 'Active" appointment career BLS bureacrat) for the MSM, and appointed commissioners know which side of the bread the butter is on.
The thing that GETS me most about this, however, is how, month after dreary month, the so-called market reacts as if these numbers are REAL, when they kinda, usually, indicate a direction (January not so much). When the number (applications for benefits) is 'bad' (up), the market reacts negatively - when good, market goes up --- and every, single, god-damned month, the numbers get revised (usually upwards) the next month, but nobody cares because they are only looking at the 'new' numbers (which will be revised the following month) and no one ever seem to catch on? ZH has been great on following and calling this - I'm glad somebody does not have a rectal-cranial inversion on this. However (sort of a big 'but' - no pun intended) I have also concluded that the majority of present market participants (HFTs especially) ain't that stupid - they know the numbers are fiddled to death, and don't care - the massaged-to-death numbers are just the excuse for the PPT to do their thing.
I sometimes get really PO'ed about this (which means I probably should get a life), but I am so grateful for the Krastings and Stockmans and this forum for continuing to hold up a little lamp in the darkness of MSM dumbed-down 'news and information'. And thanks for ZH for - Finally! - providing a space for this rant.
NFP
* diddled past participle, past tense of did·dle (Verb) Verb:Illusions rarely make sense. They are deliberately confusing. The whole point of illusions is to fool your sense and cloud your thinking.
The department of labor synthesizes reality, it is their only job to create illusions.
They shape reality to fit the data, and they create the reality. It's a loop.
What is the current unemployment rate? What would you like it to be? Bueracrats are fungible. anyway the wind blows.....
Welcome to the Hall of Mirrors, enjoy your stay in the Funhouse. The world begins here. The Harlequins are statiticians.
Ray DeVoe Jr., formerly of Legg, Mason once wrote Wall Street’s best financial newsletter after The Zweig Forecast stopped. One great 2004 issue was ‘Restocking Count Zaroff’s tropical island with “The Most Dangerous Game.” DeVoe likens Zaroff’s re-arranging the warning lights around Ship-Trap Island to cause shipwrecks to the government’s manipulating statistics, suggesting the economy will wreck as price discovery is negated. And, I ask, who best fits the analogue of Ivan, Zaroff’s gigantic deaf-mute servant????????
And, I ask, who best fits the analogue of Ivan, Zaroff’s gigantic deaf-mute servant????????
Baruch O-bummer?
David Stockman calls out the liars. Lie LIARS Lie LIARS lie LIARS. In a world of lies that word is VERY OFFENSIVE, right? Too bad. It is heard less than racial epithets because it is the elite wonder weapon of control. It is absolutely forbidden to use it. If your attitude is, "oh the're lying, so what....... Let the boyz have their fun", or variations on that theme which are pervasive within this society you are already self-enslaved. This whole stinking edifice of lies upon lies upon lies is completely founded on your docile acceptance and servile assent to LIARS plying their trade.
This really dates me folks, but i first strated noticing this data revision when I worked for Merrill back in 1971 and had acesss to the data and the revisions. I kept track of the revisions and the state of the markets when the data was released. Gosh, the number always seemed to help and was then revised several months later. Over the years, the manipulation has gotten more blatent. This last batch is obscene and an outright fraud. But, oh well, the suckers like the numbers so keep them coming. The train is stlill on the track coming at us and will get here shortly, but party on. Buy, Buy, Buy we are Bullishit on Amerika.
I sincerely hope that most of the readers of ZeroHedge are preparing for what is coming. it is not going to be pretty.
Clearly the media, Wall Street, Corporate, Washington billion elites do not want to admit that the standard of living for the 99% is and will continue to decline rapidly. No one can admit the obvious. The worldwide glut of labor has reduced wages to $25/day w/o any benefits or labor protection. At Foxconn, workers labor 12 hours/day, 6 days per week living 20 per room in large dorms under dangers health conditions. This is the norm. No one in the ruling class dares admit that the USA/EU children have to face and compete in this harsh world. So the nuclear west spends trillions on entitlements to keep labor peace and publishes phony economic stats. Whats the alternative? Tell the truth and get your head cut off or lie, lie and lie while making a few billion more. The end game will likely be a military conflict so all debt accounts can be reset and large cities/states can be rebuilt with all the remaining labor. Thank the Lord, the US is the world reserve currency and the US has 50 nuclear subs and our military spending is 9 times that of the rest of the world. Those non nuke power countries are screwed and will be forced to their knees by the central bankers. The economic and employment stats are phony. Everyone with a brain knows the facts. But the US power rules.
The Government lies? Surely you jest!
The government has always obfuscated, twisted, manipulated and often - yes - lied.
However, given what people like David Stockman, who was on the inside in the Reagan Administration, says and suggests, anyone with common sense has the right to be extremely nervous about what the real economy in these United States will look like going forward. It's bad now, but we've just gotten a taste of that which we've yet to taste, which most of us don't have any concept of.
Stockman is bright and he's not a political hack, willing to call the sky orange because it fits the agenda of whatever party.
That's the scariest part.
the numbers are fake....?....ya think.
Apparently price doesn't think so.
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