Rosenberg On The Unemployment Rate: "If It's Too Good To Be True, Then It Probably Is"

Tyler Durden's picture

Much has been said about yesterday's laughable jobs report. Here is a little more, only this time not from some politicized CTRL-C/CTRL-V major who was forced to take out the HP-12C for the first time from their storage closet and pretend they have any idea about finance and economics, but from David Rosenberg.

Via Gluskin Sheff:

There is no doubt that the bullish crowd is doing high-fives and the White House cheering over what the unemployment rate did in September — falling to 7.8% form 8.1% in August and 8.3% in July. That the 7.8% jobless rate takes it to the level that prevailed when the President took office in January 2009 has raised many an eyebrow. I don't believe in conspiracy theories. But I don't believe in the Household Survey, either. This notoriously volatile indicator has become even more so in recent months. It showed a 195k slide in July and a 119k decline in August, to only then reveal a massive 873k surge in September. So based on Household employment, the economy was in recession in July and August and then miraculously boomed at its strongest rate since January 1983 (is Obarna really the new Reagan)?

 

If it's too good to be true, then it probably is.

 

But this is why the headline unemployment plunged, and that is what is very likely to make the front pages of the Saturday newspapers. Digging beneath the veneer, the quality of these so-called Household jobs is called into question, seeing as part-time work for 'economic reasons' dominated with a 582k run-up in September. And upon closer inspection of the actual amount of slack in the labour market, the more inclusive U6 unemployment rate that does a much better job at capturing underemployment, remained stubbornly stuck at 14.7%.

It is not just fringe blogs, and deeply skeptical economicts, or ex-CEOs of mega corporations, who call out political shennanigans on yesterday's number. From Jefferies:

The household survey has been very erratic throughout the recovery. To-date in 2012, household employment has increased by 2.184 mln, but 1.72 mln of those jobs, 78.8%, were generated in two months with a January increase of 847k and a September increase of 873k. The cumulative job increases in February through August were 464k, or 21.2% of the total.

 

So take your pick, or choose something in between. We find the establishment survey to be more consistent with the overall economic and labor market and, therefore, to be more believable.

 

The unemployment rate declined to 7.796% from 8.111% in August. The decline in the unemployment rate reflects a 0.1% rise in the labor force participation rate to 63.6% from 63.5%, which is good news. There was also an 873k increase in household employment, the largest increase since January 2003. There was also a 456k decrease in household unemployment.

 

Taken at face value, the household survey would suggest that economic activity has been rocking-and-rolling and the labor market is bursting at the seams with jobs. We know that has not been the case, hence, the household data is difficult to believe and we are dismissive to the universal strength of the household survey data.

 

It would truly be wonderful if these numbers were believable, but they are not believable.

And as a bonus here is another nugget from Rosie, showing how all forward looking economic expectations are now a total joke courtesy of pervasive central planning.

Even though the chain store sales results for September were nothing to write home about, the U.S. retailing community apparently is bracing,for a holiday shopping spree. They added 9,000 workers to the payroll in September, bringing the cumulative increase to 20,000 over the past three months. And it doesn't appear that they are stopping there, because what stood out in the Challenger survey of hiring intentions for September was the 413,700 surge in the retail sector in September. That number is so big it actually matches the entire payroll in the electronics and appliance store segment. I love charts that are unusual, even if they don't comport to my view, but once again, we are probably witnessing a Ripley's moment.

 

The chart below does indeed point to upside risk to my near-term employment view, for sure for sure. But it begs the question for early 2013 ... what if the retailers are too optimistic? The answer — an early-year hangover, just as the economy confronts the fiscal cliff.

 

 

Anyway, being Canadian, I like graphs that remind me of hockey sticks, especially since I'm going to be seeing purple spots this year with no NHL. As an aside: my forecast, seeing as there is zero hockey on Saturday nights this year, is that come spring and summer, Canada is going to be in the midst of a new baby boom? :o)

As always, the best advice is just to sit back and laugh...

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Abitdodgie's picture

MDB  now the centeral planners are seeing a reward for thier work in stimulating the economy, when Romney takes over in January the economy will be a powerhouse to be noted. If we had more leaders like Obama/Romney we would of been out of this mess a long time ago ,  caused by a lazey middle class and low taxes.

Colombian Gringo's picture

Of course the numbers are a lie.  How is it possible that unemployment dropped yet record numbers of americans are on food stamps? Hang all Banksters, NOW!

spastic_colon's picture

this is why retailers are planning on hiring more if the numbers are to be trusted, they all started accepting SNAP and EBT etc as payment, since we have record numbers on welfare, may as well take their money.

ZerOhead's picture

One can only wonder if the 7.8 print has anything to do with Romney's promise to privatise and offshore the collection and crunching of these BLS stats if he wins in November...

cjbosk's picture

Hang all Colombian's, NOW!

TWSceptic's picture

How is it possible that unemployment dropped yet record numbers of americans are on food stamps?

 

Makes sense to me. Underemployed part-time workers at Mc D. want food stamps too. Although I think there is more wrong with these numbers than just counting underemployment as employment.

Colombian Gringo's picture

Of course the numbers are a lie.  How is it possible that unemployment dropped yet record numbers of americans are on food stamps?  The numbers are as real as the myth of Global Warming, another lie designed to take your money on the basis that you can tax bad weather away.

 

Hang all Banksters, NOW!

knukles's picture

Everybody is just so cynical about all of this.
If they tell us the economy's improving or race relations have never been better, that the inflation adjusted cost and quality of living excluding food and energy including hope and change has never been better, that we're the most peaceful and loved nation on earth, doing God's work, then it must be so, for the Messiah has Led Us to the Promised Land of Equality, Fraternity and Liberty.

George Orwell was prescient.

Chuck Walla's picture

caused by a lazey middle class and low taxes.

Yeah, its those high taxes that get people out shopping in a 70% consumer driven economy. Things pretty slow over at OFA that you have to come spread the propagande here? Or just depressed because our clean articulate young Commie did such a shit debate job without his crutch? In The spirit of OFA and Bold Progressive, I unite behind you, Komrade.

 

FORWARD SOVIET!


rotagen's picture

Abitdodgie, your humor is a bit dry, but pretty damn funny.

Towhog's picture

The unemployment #, the CPI, National Debt Level, all of it are made up numbers based on models, calculation and assumptions designed to manage pubilic opinion.  There is no reason to suspect that there is a known number for any of it.

Consequently, why are we surprised when the numbers go one way or the other, good or bad?  It depends on what they are trying to accomplish.

They only thing we do know is that deleveraging if permitted would collapse the money supply as it is sucked into the black hole of reverse credit expansion, deficit spending and malinvestment.

The game must be continued or it will be over. Captain Obvious?

Buckaroo Banzai's picture

Any piece of information that comes out of the Obama administration is a flat-out lie. The Executive branch as currently constituted is a filthy hive of moral degenerates.

lizzy36's picture

Yes. It is just the Obama Adminstration that lies.

You must have forgotten how the Bush Adminstration manipulated (falsified) intelligence to get the US to go to war in Iraq.

News Flash:It isn't the Adminstration, It isn't the Party, it is the SYSTEM incentivizing, lying, cheating and fraud. Remember Watergate.

knukles's picture

That's true, Lucy...
BUT, don't forget, the O and His are in Office now, so they take the fall.
Once somebody else is in office, they'll likewise take the criticiasm and venom.

Of course the whole fucking system is broken.
But these people are the ones who wanna be head of a broken system, actively pursuing the Throne of Power, gaining money, power, property and prestige through lies and half  truths...

They're gonna get shit upon, no matter their affiliation.

He's just in the seat, right now.
He owns it, the good, bad and ugly (as per Clint)
It is what it is.

And that's the way the world works.

Buckaroo Banzai's picture

W was a fucking choirboy compared to these filthy degenerates. At least W had the common courtesy to quit snorting coke before he got elected.

Word on the street in Chicago is that his handlers have been trying to detox Obama from his coke and weed habits since September but he's having a tough time. It's why he looked like such a physical and mental wreck during the debate.

Go Tribe's picture

That's because he's a Mack-daddy. We elected a fuckin' Mack. And is that hatchet he's married to really a female?

hapless's picture

"Yes. It is just the Obama Adminstration that lies."

Obligatory strawman.   zzzzz

Chuck Walla's picture

Yes. It is just the Obama Adminstration that lies.

You must have forgotten how the Bush Adminstration manipulated (falsified) intelligence to get the US to go to war in Iraq.

News Flash:It isn't the Adminstration, It isn't the Party, it is the SYSTEM incentivizing, lying, cheating and fraud. Remember Watergate.

Yes. lets dip back 40 years for relevance.  If I remember correctly, weren't we to expect better from Democrats? Instead, you play the child's game of excusing bad behavior by pointing out the bad behavior of others. Things REALLY are slow over at OFA! I join with you, Komrade...

FORWARD SOVIET!

SeattleBruce's picture

"Yes. It is just the Obama Adminstration that lies."

Hmmm, that's not what he said - but oh well...

ebworthen's picture

39% of our corn goes to biofuels rather than to feed people or livestock that feed people.

You can't eat ethanol, and part time jobs don't auger recovery.

Food prices up, fuel prices up, economy down.

But hey, 7.8% is such a nifty number.

"Forward"

Pinktip's picture

THe corn is "cooked", the ethanol boiled off and condensed, then what happens to the remaining material?  It's still fed to cows actually in a more digestable form.  We've fed Brewers grain from local Mini brewery's for years, animals love it.  The main issue IMHO is it is GMO corn and lacking trace minerals from commerical farming methods.

Round-up, NPK fertilizer, GMO corn destroys the soil..........

Chuck Walla's picture

THe corn is "cooked", the ethanol boiled off and condensed, then what happens to the remaining material?  It's still fed to cows actually in a more digestable form

Thats nice! So when the Mexicans start rioting because they can't even afford a fucking tortilla, your answer is....

FORWARD SOVIET!

q99x2's picture

Drink the ethanol. Everything will seem just fine.

Urban Redneck's picture

Look at the payroll tax collection data, the government doesn't like fudging actual tax receipt dollars to the upside, because they can't spend them.

odatruf's picture

Plus, it is harder to beg for additional dollars when they already rolling.  It's a fine line begging poverty but asserting that everything is massively improving.

shovelhead's picture

The surge in jobs included anticipated demand for professional linestanders for iPhones.

francis_sawyer's picture

& paid protestors in Cleveland...

booboo's picture

The only thing Friday's UE update will accomplish will be a higher suicide rate as more people will again go out on job hunts and get kicked right in the ding ding along with a good hearty laugh.

lolmao500's picture

In other news, Germany is dropping the US dollar and will only trade with China using euros and yuans.

DavidC's picture

From what I was reading earlier in the week (including somewhere on ZH) given the American population the level of variation is plus or minus 100,000.

Which sort of makes a joke of the figures anyway, particularly when they don't even come close to the supposed demographic population monthly increase.

DavidC

voltaic's picture

As unemployment benefits expire for more and more and as those benefit weeks become shorter, it's only logical that those once unemployed with checks in the mailbox became unemployed without checks in the mailbox. They would have to find some sort of work or starve. That could be why there are so many more working part-time jobs, since the full time jobs are still not in abundance.

ziggy59's picture

Good point..hence we have 48 million on food stamp program..

Curt W's picture

 hiring retail sales people would imply sales are up but the Sales tax receipts in CA has been plunging, 

I think someone at BLS screwed up.  New jobs were up by 8.73 thousand, someone forgot the decimal point.

knukles's picture

Nobody at BLS screwed up.

Either the whole of the Federal gubamint is 100% perfectly screwing up or lying... or a combination of the two adding to 137.983%.

Which I can handle.
The whole point is credibility.
Which has been shredded to naught 

 

(sorta like the Bill of Rights)

socalbeach's picture

That's what Rosenberg seems to imply with his statement that,

"I don't believe in conspiracy theories. But I don't believe in the Household Survey, either..."

Either that or he thinks only one person made the decision to, and fudged the data, in which case it wouldn't be a conspiracy.  Good article otherwise.

PUD's picture

What is so hard about providing employment data? They should know to the man how many actually signed up for benefits no? They should know to the man how many Americans there are, their ages etc no? They should know to the man how many had federal deductions taken from a paycheck no? Therefore they should know to the man how many human beings worked or were working on the 1st Friday of every month no?

Why should it be so difficult to simply provide the raw data?

1. On Oct 5th 2012 there were (x) number of working age people in America

2. On Oct 5th 2012 there were (x) number of working age people in America who had deductions taken from their pay indicating that they were indeed employed

3. One divided by the other gives an employment (or unemployment) rate

Period.

Ask any corporation in the world how many people they have, their wages, their deductions etc and they can tell you to the penny

Why not gov?

Oh, answered my own question there.

blunderdog's picture

Although you're 100% correct we *could* do this assessment properly in the US, we have a significant number of independent contractors "running businesses" with 1 employee, and most of the information about the employment of those employees doesn't get captured until tax time.

It's not always obvious when a 1099'er is or isn't "working."  It's certainly not as easy as you suggest, although knowing full-time payroll employees would be a useful metric, unlike the nonsense the BLS currently publishes.

PUD's picture

self employed have to file quarterly est etc. 

The BLS could give 2 sets of data

The generic raw data on wage earners and a quarterly summary including self employed

It is all on computers and in data bases

They purposefully fuck it all up with needless over complications, adjustments etc when they should just be data collectors

Let me figure out what it means..analysis from uncorrupted data isn't that hard

RockyRacoon's picture

Self-employed do NOT have to file quarterly unless they will owe a tax over a certain threshold.  For many years I never filed quarterly, even it I owed a tax, because the penalty was low enough to be offset by the accounting cost at the end of the tax year.  So, what you point out ain't necessarily so.

PUD's picture

Why don't Europeans have these same issues when they report unemployment? They give one number and no one contests it. Why?

blunderdog's picture

Laws could maybe be different in that country.

j0nx's picture

Cause day ain't gotz a black president. I shit you not I have read dozens of times on the net the only reason anyone is questioning these numbers is because Obama is black and we are just rayciss. This country is headed for civil strife and soon.

Binko's picture

There is an ongoing transition in our country to low-wage, no-benefit jobs. Business has figured out that they can dump the guy making $50,000 with benefits and hire two or even three part-timers making minimum wage with no benefits to take his place. In the world of government statistics this is an increase in employment. They have also figured out entry level jobs which once paid $12 to $16 an hour can now be easily filled at minimum wage.

The employment number is fairly meaningless when most new hires are workng as temporary serfs who don't make enough to afford even a semblance of a lower-middle-class lifestyle. The big story that gets little play is that the transition to low-wage temporary work means that the working class will not generate enough tax revenue and spending power to sustain any of the traditional structures of American life. 

 

Poor Grogman's picture

"the working class will not generate enough tax revenue and spending power to sustain any of the traditional structures of American life. "

Yes instead they will be forced into getting into debt to fund their very existence.

This is how it works when the money changers are calling the shots.

Whichever political party happens to be in power is irrelevant.

Debt serfdom bitchez....

LiesAreTheOnlyTruth's picture

Government policies are just making it worse.

Too much regulation means business will get around those with temp hires.

Temp hires won't make enough to pay much in taxes.

Transfer 80% of the workforce to low wage earners.

Profits skyrocket, stocks go up, tax revenue goes down and debt goes up.

So tax the corporations and stock trades higher to fix the problem.

CONCLUSION:

You tax away the work of low paid employees via the stock market thereby robbing them of the income they could use to actually ENJOY life.

Increase OVERSIGHT and reduce regulations so business finds benefit in higher paid employees who can then spend money they earn as opposed to having their efforts, paid in low wages, translated into government taxation at the corporate/stock level.

It's just another form of slavery engineered by our foremost slave trader and glorious leader.

SeattleBruce's picture

"The employment number is fairly meaningless when most new hires are workng as temporary serfs who don't make enough to afford even a semblance of a lower-middle-class lifestyle."

That's why the U6 number is so much better, as it registers underemployment (people that want to be working more, would rather work full time, etc.  And Shadow Stats is also important, as Williams reverts to a more accurate past model of UR, inflation, et al.

http://www.shadowstats.com/

blunderdog's picture

They accidentally counted snowjobs as new hires.

Silvertrader's picture

You better create your own job. Why not become a professional trader?