Some Fuzzy Math On Unemployment

This morning, the "jobs numbers" for March came in, nearly on target, with 663,000 jobs being lost (13,000 jobs higher than the consensus estimate of 650,000) and a spot-on 8.5% unemployment rate (See Full Story). Yesterday, I had wrongly predicted that number of jobs being lost would exceed 700,000 with an effective unemployment rate of 8.7%.

If all other factors remained constant, the 8.5% unemployment rate makes sense. That's because the 8.5% rate equates to about 650,000 jobs being lost per month for each month in the first quarter; January through March. However, that wasn't actually the case. In releasing this morning's numbers for March, the Bureau of Labor and Statistics went back and revised January's numbers upward. For January, the amount the jobs being lost was upped from 655,000 to a new number of 741,000. That meant that January's unemployment was understated by 86,000 jobs. February was left in tact at 651,000 jobs being lost.

Now, if you combine the higher-than-estimated number for March with the higher revised number for January, you come up with a number that is about 100,000 jobs or 5% higher than the number that would have supported an 8.5% unemployment rate. That, to me, says that the unemployment rate is being understated and it should be somewhat higher. Probably, 8.7%.

I don't know what is going on. However, the math isn't there to support an 8.5% unemployment rate. Also, it is very strange to go back and revise January without adjusting the month following it. But, instead, they left February alone. To me, this makes any of these numbers somewhat suspect.

Let's not forget that the Bureau of Labor and Statistics reports up to the President through the Commerce Department. Could there be some "fudging" going on to make February and March, the month's of Obama's Presidency, look better than January, when Bush was still in office? From a political standpoint, that makes sense because Obama is in the midst of getting his very fat budget approved through Congress. Having a higher-than-expected unemployment rate might have some adverse affects on that approval process.

Of course, that's just my opinion and I am quite sure that all those on the left would strongly object to what I was implying. However, the fact remains...the numbers don't quite add up! I guess we'll just have to wait and see if, in the next two jobs reports, February and March are revised upwards or downwards or if their revisions were actually piled up onto January's numbers. If there are no forward revisions for February and March, you can only conclude that something isn't quite right. Never in the history of jobs reporting have any numbers remained the same as when they were initially reported. That kind of accuracy just doesn't happen in"government work"; as the old saying "good enough for government work" implies.