We’ve been thinking about the unemployment number lately because it just doesn’t seem to want to go down. Well, of course it doesn’t because the economy doesn’t seem to what to go up. Genius!
But how does the BLS come up with the unemployment numbers so frequently and with such seeming accuracy. Well…if you really want to know…it guesses them. Yes, you heard it right. The numbers are guesstimates at best…in some cases supported by voluntary surveys…which we all know are infallible. Right!
Take the numbers from July 6th for example, which were reported for June, 2012.
The BLS represented that non-farm payrolls increased by 80,000 new jobs in June. Sounds good…well OK…right?
Not really. At Craven, we’re guessing that it was more like a loss of 40,000 jobs.
Why…because the gentle lads and lasses at the BLS concluded that new businesses that started up in June created 126,000 new jobs. Wow…fantastic…right? Wrong.
This is a total guess based on what they call the birth/death ratio…which has nothing to do with crying babies or funeral parlors but does have something to do with fantasy land. You just have to give it a fancy moniker like “the CESBD adjustment”, to make it sound official and therefore accurate…which it is not. If it was, why would they have to constantly revise it.
The BLS really has no idea what new businesses started, let alone how many employees these new businesses hired. Reality check! When a small business starts up, it does not usually go out and hire up a storm of new employees. Usually, such businesses are thinly capitalized and these days, so much of a new small business set up can be done using third party contractors and / or the web, that the need to hire employees is reduced from the get go.
The 126,000 number was added against the loss of 44,000 jobs to create the illusion of a positive number for the release of the June jobs report. In reality the jobs number was probably flat to a loss. But no one wants to hear that.
Everyone knows that the US needs150,000 new jobs each month just to break even with population growth, and we need millions more to put displaced workers back in a job. It is just not happening but these bogus numbers help to perpetuate the fantasy so Gentle Ben can hope that the market will somehow make everyone rich and spendthrift again.
So the next time you hear the unemployment numbers move the market one way or the other, remind yourself that the BLS may have one too many syllables in its title…and be wary….especially as we get closer to November.
