(By Bert Dohmen, founder of Dohmen Capital Research)
In our business, over the past 46 years we have used several slogans to explain what we specialize in. One is: “Timing is everything.”
Another: “Where you see tomorrow’s headlines today.”
The latter was confirmed this week. We wrote an article in early February about the BLS jobs data being “BS,” which is a topic that is now coming to surface. ZeroHedge, a great website for true financial research from the sharpest analysts, had a story about the hoax of the BLS labor numbers this year.
Read that article published June 5, 2023: “How The BLS Data Is Being Manipulated.” (The source of the material appears to be from South Bay Research.)
We congratulate ZeroHedge and the sources for bringing this most important topic of the BLS’s “fake news” to the attention of a wider group of thinking people.
We have explained for years, and especially the past year, that the publicized BLS employment numbers are politized and deceptive. They should be classified as “Fairy Tales."
On February 10th this year, after the deceptive January BLS jobs numbers were touted in the media, we wrote an article on ZeroHedge, titled “Why the “Bullish” Employment Report is Complete “BS”.
In our article and in our research services since then we explained how these much publicized, alleged “hot labor market” numbers are actually very much falsified and not even close to reality.
Why is this important? Because it affects so much. The vast majority of bullish money managers always mention the “hot labor market” as their reason to expect a “soft landing” for the economy, or even “no recession.” Why won’t they spend perhaps 30 minutes on the BLS website to discover the true numbers?
We blame the BLS, but realize that that they have to please the boss and provide the positive headlines for the mass media. However, it is the job of money managers, analysts, and firms in our business to discover and reveal the truth. Money managers are very gullible and find it more convenient to believe the politicians than to spend the time to verify.
If you have such a money manager, you might think about reconsidering your choice.
Another great danger we see is that the hundreds of Ph. D. economists at the Fed may also believe these numbers and recommend monetary policy to the FOMC accordingly. Are they smart enough to perhaps question the BLS numbers, or even try to understand how those numbers are derived?
Our experience with many overeducated economists is that they simply believe the headlines. Websites like ZeroHedge feature a number of great analysts who do original thinking. Most of them won’t be seen on TV. It is no guarantee they will be right, but at least they have original thoughts and make you think.
Back when I was in college economics class, I challenged some of the statements made by the author of the most widely distributed Economics text book, Paul Samuelson. It is believed that the textbook won him the Noble Prize.
I debated with my professor about some of the false theories in that book. Years later, the economist/author retracted some of those. I was glad I had changed my major to Chemistry.
One item was his audacious statement that “savings are bad for the economy.” It is no longer in his textbook.
Back to BLS and the deceptive statistics, which are peddled under the name “seasonal adjustments.” With that term, they can call the earth flat, of course “seasonally adjusted.”
With seasonal adjustments in January this year they turned a job loss of 2.5 million into a gain of 517,000. And all the economists and journalists ignored the true number of 2.5 million jobs lost.
The recent ZeroHedge article has a good chart of the two measures of employment, the Household Survey (blue bars) and the Establishment Survey (green bars). Both are very defective. Here is the chart of the two (via zerohedge):
Here is how both surveys are conducted:
- The Household Survey: the BLS calls 60,000 households and asks if anyone has worked that month. It doesn’t matter if they didn’t get paid. Mowing the lawn for grandpa counts. If it was done 4 times that month, it counts as 4 jobs, even if was unpaid.
- The Establishment Survey: It gets employment statistics from large companies. But over 90% of companies are small firms, which don’t report to the BLS. So the BLS guesses how many people were hired or fired by small firms. Nothing scientific or real about those numbers.
As is easy to see, those numbers cannot be considered reliable.
Be skeptical and don’t trust until you verify.
Bert Dohmen, Founder
Dohmen Capital Research