When I read worldwide economic numbers, I consider the government that is reporting them. For example, if it’s China or a communist country reporting them, the numbers are almost always fake. It’s as if Muhammad Saeed al-Sahhaf (Bahgdad Bob) from the Iraq war is reporting them. It’s obvious they are making things up.
When it is a Western democratic country, the numbers are usually pretty close to what is going on. Every economic release has some wiggle room. There is always some sort of revision up or down.
One thing is certain. Everyone should toss out every statistic from March of 2020 until at least to when government shutdowns ended. That means you need to compare 2019 to 2021. Good economists do that with Great Depression numbers all the time since it was more than a four-standard deviation event in economic history. That means it will never happen again. The only reason to look at them is to see if the economy is performing at pre-forced government shutdown levels.
Last night when Biden gave his State of the Union speech, he cited a lot of job numbers that were just meaningless since they included 2020. A robot could have done as well after the government shutdowns when it comes to increasing employment.
One thing a lot of people have said since the turn of the millennium is that US government statistics are being intentionally manipulated to make the President look better. During the George Bush administration, there were accusations by Democrats and Democratic pundits that numbers weren’t actual. They had a political knife to sharpen since they lost a close election in 2000. When Obama was President, there was hullabaloo on so many issues from his administration. Republican pundits accused the Obama-led Department of Labor of fudging numbers. During Trump’s administration, Democrats were at it again. It is a political cycle.
In all cases, I thought they were wrong. I knew economists who relied on those numbers to compile academic research and financial research that said the pundits on both sides of the political aisle were off base. To bolster my confidence, it helped that the economists came from both sides of the aisle and were both classical and Keynesian economists who normally wouldn’t agree.
I am growing very cynical now though. The unemployment numbers put out by the US Department of Labor seem highly manipulated every single month. Today’s unemployment number came out. The Department of Labor reports that the economy added a seasonally adjusted 270,000 jobs in February. However, it revised the January number from 353,000 jobs to 229,000 jobs. That’s a 35% drop in the revision!
Anyone is okay with a revision that is small, within one standard deviation of the initial reported number. However, 35% is a huge miss. When you account for population changes, people quitting and other normal actions that happen, it gets worse. The sad thing is it keeps happening over and over and over again during the Biden administration.
Mike Shedlock who blogs about economics also sees the same thing. So does bank economist Brian Wesbury and business television commentator James Iuorio. My opinion isn’t isolated or a voice in the wilderness.
Explaining the revisions in layman’s terms is hard to do. It’s a bit of hocus pocus with the numbers because you have to follow it through, then do some mental calculations using algebra to find the real number. Mish does that in his blog post.
For January of 2023, the BLS revised jobs lower by 234,000. Yet, the as revised monthly change was +10,000. This implies a huge negative revision to December of 2022 that we do not see.
For 2023, the BLS revised jobs significantly lower for the first half of the year but tapering off towards December. The result was a huge month-over-month upward revision to December from +216,000 to +333,000.
Meanwhile, the BLS also tells us (next chart) that employment in December fell by 270,000.
The massive discrepancy between jobs and employment continues. Revisions make it worse but due to reporting practices we cannot see actual month-by-month totals
What’s the problem you might ask?
The stock market relies on these numbers to try and predict what’s going to happen. Economists who work for companies use those numbers to make forecasts that they give to management, who then plan for the future. American citizens rely on those numbers to give them a sense of the future so they can plan for it too.
The Department of Labor under Joe Biden is screwing with those numbers.
I wrote on the same topic today and used the same chart.
There is no question that the numbers coming from the BLS are not just suspect, but woefully wrong.
It is worth a minute of study to understand from whence these particular employment and job creation numbers come -- they are completely algorthmic driven estimates.
They are totally unreliable and, yes, they are being manipulated for political reasons.
You can believe nothing from this administration.
JLM
www.themusingsofthebigredcar.com
@Jeffreycarter it goes to show that "Figures do not lie, but Liars can Figure..." Nice work.