More Confusing Unemployment Numbers

In past blog entries, I have expressed my confusion over the numbers being released by the Bureau of Labor and Statistics. Friday's employment report just deepened that confusion.

First let me say, a consensus of economists had predicted that the amount of jobs being lost for last month should exceed 500,000. Because of that, those same economists projected a 9.2 percent unemployment rate from the current rate of 8.9 percent.

Remarkably, only 345,000 jobs were actually lost last month. That was 155,000 jobs better than the estimates. Further, the two previous months were also adjusted retrospectively to reflect less jobs being lost than had been previously thought (See Full Story). I say remarkably, because the weekly unemployment reports have been showing an increasing number of workers who were remaining unemployed and collecting benefits. That's the primary reason why the surveyed economists projected a loss of jobs in excess of 500,000.

The kicker comes in with the new unemployment rate being higher than estimated or an actual 9.4 percent versus the expected 9.2 percent. This is despite the loss of "less" jobs last month and the favorable revision of job losses for the two previous months.

To me, this higher than expected unemployment rate is a result of the Bureau's understated unemployment rates in previous month's and, now, their attempts to rectify their bad math. Something that I had complained about before in this blog (See my blog: "Some Fuzzy Math On Unemployment").

I am still having problems with this month's numbers. For sure, the Census Bureau's hiring of over a million workers in the next 9 months is probably muddying up the facts. But, it is interesting that no additional jobs were shown in the "Government Jobs" category of the report; accounting for additional census workers being hired. In fact, the "Government" actually shed 7,000 jobs in the last month. That to me is a head scratcher since the initial batch of census employees began being hired last month.

All in all, the report has some real inconsistency issues. The unemployment rate jumping as it did with a less than expected loss of jobs makes absolutely no sense. The lighter than expected job losses is inconsistent with the weekly unemployment benefits claims. And, where are those Census Bureau hires?

As the above referenced article mentions, most analysts believe that unemployment will jump to a rate of 10 percent of more. Some say as much as 10.7 percent. It is hard to believe that we won't go above 10 percent with 7 months left to report for this year and with the rate now sitting at 9.4 percent. With thousands of jobs being lost in the auto industry (dealers and assembly line workers), it is my guess that the year end number will be closer to 10.7 percent; rather than 10. To date, only 4 percent of the stimulus package has been spent. But, if you look at the actual spending details, many of the jobs being created by the stimulus program are short-lived in nature; such as the filling of post-winter potholes in Iowa and other road repairs (See a typical story about the stimulus package spending). Once those projects are done, any people that were hired will be back on the streets.

Lastly, there will be a lot of college grads who are now entering the job market and, in most cases, won't be able to find jobs. This, too, will push the unemployment rate up.

In conclusion, expect the Obama Administration to spin the 345,000 job loss as a "BIG" improvement and try to give us all the impression that their Stimulus Package is working. Of course, they will completely ignore the inconsistencies that I have pointed out. Let's not forget that Obama's own economic team said that the unemployment rate would top out at 8 percent for this year. At the current rate of 9.4%, they missed that mark by over 17 percent. Now, I guess I shouldn't hold my breath waiting for an explanation of why they were so far off on that number! You've got to wonder how many "other" numbers they are off by at least 17 percent --- and still counting! That's why I believe we will be closer to a $2.2 trillion deficit for this year than the Administration's early estimate of $1.7 trillion.

I would hope that America wakes up to the fact that we are getting spin after spin and no real facts from this White House.