About Those 2.9 Million Jobs Lost In January...

Tyler Durden's picture

Much has been said about the January Non-farm payrolls number, which rose by 113K on expectations of a 180K increase, most of which has been focused on the US atmospheric conditions during the winter. There is a problem with those numbers: they don't really exist (as for the non-impact of "the weather" on jobs we showed previously that the number of people "not at work due to weather" as calculated by the BLS itself. this winter was lower than 2008, 2009, 2010, 2011 and 2012 - so much for historic winter weather).

So what really happened in January?

For the real answer we have to go to the BLS' non-seasonally adjusted data series. It is here that we find that in January, some 2.870 million real, actual jobs were lost, not gained. Putting this further in perspective, the number of NSA jobs losses in January 2014 was greater than in January of 2013, 2012, 2011 and tied that of 2010. In fact only during the peak of the depression in January 2009 was there a greater NSA drop in the first month of the year when 3.691 million jobs were lost.


So how does a loss of 2.9 million jobs become a "gain" of 113K jobs in the same month? Simple: through the magic of seasonal adjustments.

Incidentally, for all those confused, it is these same seasonal adjustments that at least on paper, are supposed to account for such things as seasons, and, well, weather. Only sometimes they apparently don't, like right now. Which is also the reason why one can completely ignore the entire seasonal adjustment process because one after another economist is lining up to inform anyone caring to listen that the seasonal adjustment number is actually not adjusted enough.

Below we break down which jobs comprised the 2.9 million jobs lost when ignoring the ARIMA fudge factors.

On one hand the transition from 137.386 million seasonally adjusted December jobs to 137.499 million seasonally adjusted January jobs is simple: just add 113K jobs.

On the other, the one has to consider that the actual number of January 2014 jobs was a far lower 135.396 million jobs. Furthermore, one has to recall that his unadjusted number is the one impacted by the monthly Birth-Death adjustment. For those who don't recall this nuance, here is the BLS' explanation of this incremental adjustment factor to the final number:

There is an unavoidable lag between an establishment opening for business and its appearance on the sample frame making it available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth.


Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses due to business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the birth and death employment.


The second component is an ARIMA time series model designed to estimate the residual birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual of births and deaths over the past five years. This ARIMA model was originally applied once a year using new data to calculate the net birth/death forecasts. Effective with the release of preliminary January 2011 employment estimates in February 2011, BLS began updating the Current Employment Statistics (CES) net birth/death model component of the estimation process more frequently, generating birth/death factors on a quarterly basis instead of annually.


The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations. Note that the net birth/death figures are not seasonally adjusted, and are applied to the not seasonally adjusted monthly employment estimates to derive the final CES employment estimates.

Simple enough, right. Anyway, in January the Birth-Death adjustment resulted in a further 307K jobs being subtracted from the final NSA number as an intermediate adjustment step.

So what happened next? Instead of explaining, we'd rather show it:

While there are numerous other intermediary "transformational" steps designed precisely to obfuscate and baffle with BS, the bottom line is that through the magic of the BLS' statistical gimmickry, a NSA change of -2,870K, impacted by a further -307K "Birth/Deaths" (or -3,177K total), became a positive 113K change in the seasonally adjusted jobs series, or a total "seasonal adjustment" factor of 3.290 million!

And here, keep in mind, that the Wall Street estimate for a payroll "beat" was the addition of 180K. Of course, in keeping with the above "seasonal" transformation, what this means is that instead of having added a total of 3.290 million "statistical" jobs, the Bureau simply had to bump up the "fudge factor" to 3.357K or over, to match or beat the expectations. The difference between the 3.290MM and 3.357MM numbers? 2%.

Which begs the question: why did whatever prompted the BLS to add just under 3.3 million "excel" jobs, not also prompt them to add another 57K jobs to the final adjustment number which was a minute fraction of the total fudge factor, and beat Wall Street estimates, reincarnating the narrative that the US economy is now back in "escape velocity" mode, it is "self-sustaining" and all those other spins and stories serious economists tell themselves to justify that QE has worked? Unless, it was specifically the intention of the BLS to not give such an impression.

Whether the reason was precisely to give the Fed the loophole it needs to taper the taper in a few weeks time when the latest "economic recovery" thesis crashes and burns, will be uncovered over the next several months.

Finally, for all those same very serious economists who lament the impact of the weather on the Establishment survey, and yet point to the surge in the Household Survey which "added" 638K seasonally-adjusted jobs, the unadjusted change there was a drop of 403K jobs. So there's that.

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VD's picture

fudging works.

economics9698's picture

Blame it on the weather.

Oldwood's picture

I sure wish I could seasonally adjust my income. They probably will for tax purposes.

Boris Alatovkrap's picture

Boris is confuse...

In Amerika, Centralized Heat is for winter, Conditioning of Air is for summer. But statistic is seasonally adjust!? If Amerika is pursue economic death wish, some day for many citizenry is no heat in winter, no cool in summer.

Clint Liquor's picture

The central planners truly believe if they can just convince 'the people' that everything is alright, it will be?

The Final Straw's picture

Only once they convince the unemployed that they are working. Or untethered from the burden of work.

Boris Alatovkrap's picture

You are pretend for work, government is pretend for pay you. Is all unicorn and skittle.

Boris Alatovkrap's picture

Is good enough for Boris! Now, where is chocolate ration?

TruthInSunshine's picture

In Soviet Russia, no complaining about whether any year's vodka was distilled from grain, potato or even horseradish mash.

For those who complain, vodka rations were reduced, which was like year sentence to hard labor gulag.

kill switch's picture

Decades ago when we had legitimate unemployment rate of 4% we had winters,,no??? I'm fucking tired......

mccvilb's picture

Corporations are dead people too.

remain calm's picture

Blame ourselves. We let CNBC, the bankers and the politicians lie to us and we do nothing. We let them get away with it. No one other than this and a few blogs on the internet call these lying cock suckers out. It is shameful.

Oldwood's picture

I have no way of stopping someone from lying or even hold them accountable. Our economic system, firmly tied to politics, actually rewards the best liars. I am out of the markets and find questionable the concept of voting, so exactly WHAT are we supposed to do? I tell everyone who will sit in one place long enough to hear it. I find many understand the system is corrupt and broken but no one seems to know what to do about it. The sad part is that so many here are neck deep in the markets, believing they can profit from this mess, and many do. But this is how it stays afloat. People participating. Making a living from investing is really not all that different than making a living from scamming food stamps, welfare, unemployment and all of the rest of our "entitlements". Those scamming these benefits see themselves are the smart and savy to borrow a phrase, just like everyone on this blog who make money trading. Everyone wanting to make lemonaid from lemons, completely indifferent to the corruption that fertilizes those lemon trees.

Wait What's picture


"really not all that different"

until the music stops playing, everyone has to dance.

if Obama has taught us anything its that the system is so deeply rooted that 'changing Washington' and all of its dependents has to come from the ground up, it can't  be voted into office, can't talk its way into existance. they will never voluntarily give up their grip on power in all of its manifestations.

the 1st step is to stop consuming all the garbage we are told 'we have to have'. imagine what would happen to the global economic system if Americans suddenly said 'i don't need that, so I'm not going to buy it.'

there is one difference between the two groups you mention, what that scamming begets. protection from the inevitable vs. the luxuries of the free shit army.


it took all of about 5 minutes from my diatribe to discover the financialization of the economy continues apace, if its not accelerating:


Oldwood's picture

We are drowning in shit. They are growing the FSA at an incredible pace and are betting that the conservative cowardice that has enabled its growth will only become more tepid as this growing population of dependents will be very unforgiving if their bennies go lacking. This will end with considerable violence in the streets. And we know who's side the government will come down on. Corporate bosses will be throwing their middle management under the wheels of the train, and those being attacked in their homes will be found guilty of hording.

kchrisc's picture

At a minimum, stop. Stop paying, stop obeying and stop playing their games.

Look, the banksters stole the money in the first  place. So quit paying them. Bring the whole corrupt system of theft down around their ears. Eventually you won't be able to pay them in the first place, so just stop.

Quit obeying. Not easy I know, but overtime this will become easier to do and clearer as to where and when. Obedience is the only power they have over you, literally. It doesn't come from a barrel of a gun like Stalin said, it comes from you. Their guns are for coercing you to give them obedience and power.

Stop playing their games. Stop voting, stop watching their propaganda box,, etc. Just stop. Voting is criminal anyways if the institution that you are voting into, like the DC US, is criminal.


The Four Rs
Rejection: Quit paying, quit obeying , quit playing
Revolution: It is inevitable, so prepare, as they are.
Retribution: Is there really any place for these sociopaths and criminals in a restored civil and Constitutional society?!
Restoration: Restore the Constitutional republic.

The Final Straw's picture

Would you prefer a hellfire missile or a top bunk in Club FEMA?

Oldwood's picture

Who me? My name is Juan and I am new to your country. I snuck in and live with my cousin. I came here for a better life through American government provided healthcare, education, housing assistance and many other blessings. But I know NOTHING.


Absinthe Minded's picture

I'm okay with camping out after they take my house, but I'm sending my wife to stay with you. Good luck with that!

dtwn's picture

Blame it on the rain.


. . . . . .. . 

Blame it on the rain (rain)
Blame it on the stars (stars)
Whatever you do don't put the blame on you
Blame it on the rain yeah yeah
You can blame it on the rain
Ooh, ooh (ooh)
I can't, I can't. I can't, can't stand the rain
I can't, I can't. I can't, can't stand the rain
Yeah, yeah
Should've told her you were sorry (sorry) huh
Could have said you were wrong
But no you couldn't do that. No, no
You had to prove you were strong ooh
If you hadn't been so blinded (blinded)
She might still be there with you
You want her back again
But she just don't feel the same
Gotta blame it on something
Gotta blame it on something

Blame it on the rain that was falling, falling
Blame it on the stars that did shine at night
Whatever you do don't put the blame on you
Blame it on the rain yeah yeah

. . . . . . . .

Boris Alatovkrap's picture

When citizenry is choose rule of man over rule of law, blame in on "the reign".

Mr Pink's picture

Exremely bullish for stocks

Mr Pink's picture

So is it gonna be called "reverse taper" or "untaper" or "widening" or "width expansion" or......

X_mloclaM's picture

TD said taper into weakness, you know, like ex PD credit manager Rickards' warned

ya gotta do that with good numbers, before crash then untaper is asked for

remember, qe is now 'bad' (despite all of the recovery it afforded, and how much 'worse' 'everything' would be right now, omg), its self-hate-time and time for 'surprising' fade in the robust economic shoot thickness

analyzer_66's picture

Smoothing by mister smoove b in whitehouse

tempo's picture

Withholding taxes are not declining??

Its Only Rock N Roll's picture

It is at this point I really wish I took the blue pill.

NOZZLE's picture

if the riots in Kiev we're for real what you would see in front of 1600 Pennsylvania Avenue would make what's happening in Kiev look like a friendly neighborhood get together.  

economics9698's picture

No more EBT, demographics, it will not be pretty.  Better have a plan to move the loot out of DC.

Seasmoke's picture

It's time to get off this crazy fucking merry go round !!

Rusty Diggins's picture

"The number of NSA jobs lost in January 2014 is greaterthan in January 2013"

Bad reading comprehension skills, for a moment my mood lightened.

yogibear's picture

Big business for Social Security Disability attorneys and future socialism supporters.

Curt W's picture

2.9 million untethered from thier oppresive jobs are now free to express thier creativity.

Living the socialist dream

swmnguy's picture

All Socialists, everywhere, support full employment.  Only in a crony-capitalist crypto-fascist state is it considered worthwhile to pay people not to work, to further drive down wages.

Absinthe Minded's picture

Quit wasting your time posting here! You have to get to work to support the lucky half.

Possible Impact's picture

They baked a double batch of Fudge.

Yardfarmer's picture

oh, so aside from the headache and questioning my own basic sanity and comprehending why a Phd. in statistics is such a valuable commodity, what it comes down to is that there's lies, damnable lies, and finally, statistics. 

SweetDoug's picture




Has anyone pointed out, or realized, that being seasonally adjusted to be working, when you're one of the 2.9 million that were actually lost, does nothing for you?


Fin-ƒµç?¡??-nancial Propaganda of the most vile order.



Rubbish's picture

I want Freegold

Droel's picture

So, to balance this shit out, come summertime, we actually add over 3 million jobs but the BLS calls it 200k?

kw2012's picture

About the only statistics that are meaningful these days, work force labor participation rate and tax receipts(which can be deceptive so I guess that just leaves work force participation rate)

Peter Pan's picture

Sorry buddy, just saw your comment about tax receipts.

Can we also look at how many college graduates are out of work?

Can we also keep an eye on how many new recipients of invalid pensions the states have created?

How many new prisoners etc?

X_mloclaM's picture

thx TD for all

His name is Robert Paulson!


Muppet's picture

I would be worried but the gubbermint said unemployment continues to drop.   Its getting better... thats what I keep hearing. 



Seeking Aphids's picture

How can you seasonally adjust a survey? This whole sa business is crazy...just like the adjusted unemployment stats, the adjusted iinflation stats, the price of gold, the interbank lending rate, not to mention the adjusted interest rates, value of the $ and equity evaluations...........if someone made this stuff up they would put them away. A helluva reversion to reality must be coming down the pike. Either that or we have totally spun off into never never land......