Look at last week's article on the employment situation, and especially the new unemploymnet claims numbers that come out every Thursday. This blog told you--deaon on yet again, in foresight--that the media's "spin" of a conistent improving TREND in the weekly jobless claims numbe was FALSE--sheer propaganda. You will remember that the weekly number reached a low of about 365,000 (seasonally adjusted), similar to what the number did at the ned of 2010 and the beginning of 2011 (with the same FALSE conclusion--noted again in this blog at the time--that an "improving trend" had been established). You will remember that this same number reached 375,000 in February of 2011, and had gone rather consistently under 400,000 at that time. However, the number--at the beginning of 2011, as the media was rpoclaiming a "steady, if slow, improvement" began to JUMP AROUND the 400,000 level until finallyl going CONSISTENTLY ABOVE that level in Arpil-May of 2011.
History seems to be repeaing. We reached that low of 365,000 new unemployment claims almost a month ago. Since then, here are the numbers: 387,000 (revised from 381,000); 375,000 (revised from 372,000); and 399,000 (yet to be revidsed, but almsot surely ABOVE 400,000). Notice that the headline says that the weekly number went above 400,000. I just gav e you today's UNREVISED figure of 399,0000 (coincidence or MANIPUALATION that the number is right under 400,000?). However, the weeklyh number is almost ALWAYS (90% of the time) reviesed UP at least 3,000 in the following week (as it ws this week, after being revised up 6,000 in the previous weeek).
Yep. As I keep teling you, the way these numbers is reported is a LIE. It is a LIE EVERY SINGLE WEEK. Did you hear about the NEW TREND in the WRONG DIRECTION, which has now coninued for 3 staright weeks? Not a chance. But the media, as they did last year, were quick to see a "trend" in the two month "drop" in the new unemoployment calims number, even though it was only those two weeks below 370,000 that represented much of a drop. But that is not even the most obvious LIE. As stated, these numbers are always rEVISED the next week, usually UP--the bad direction--at least 3,000. It is worse than that. The SEASONAL ADJUSTMENT makes the reported number an ESTIMATE (a subjective number, based on a formula rather than COUNTING). Seasonal patterns can CHANGE. That makes these "seasonally adjusted" numbers very unreliable--especially in the short run. As this blo told ou last week, the main TREND that appears to be developing (have to seee mroe numbers to be sure--even all of teh way to spring and summer) is for IMPROVEMENT to APPEAR to take place in the second half of the year--especially the last quarter as to employment numbers--only to see apparent DETERIORATION occur in the first half of the next year. A case can be made that NEITHER the deterioration or "improvement" is very real. Our economy may just have become very SEASONAL (which my brother, the accountant, says is a symptom of a BAD economy). In all events, we know that the way these "seasonally adjusted" numbers are reported is a LIE. They are reported as CONCRETE numbers, like they were COUNTED, when they are numbers WRITTEN ON WATER. At best--assuming no manipulation, they are ESTIMATES based on seasonal patterns that can CHANGE (or the forumal be because of factors that the formula does not adequately evaluate).
Yes, we now come to the HEADLINE. Obama did lose 642,000 GROSS jobs last week. That si the "raw" (counting) number. That number was "seasonally adjusted", because we know that jobs are usually lost after the Christmas season because of the seasonal change in demand (even if the economy is fairly good). The "raw" number jumps around. For example, when the number first dropped to 381,000 or so in December, the "raw" number was someting like 522,000. Then, then next week, the seasonally adjusted number dropped to around 365,000, but the "raw" number dropped much more substantially (to around 433,000---still much higher than the seasonally adjusted number). Notice how the "raw" number CHNGED almost 100,000 in a single week (not unusual for that number). Now Rich Santelli, who is the ONLY person regularly featured on CNBC who is not an economic fascist, said (on CNBC) that this "wild' jumping around is why it makes no sense to report the "raw nubmer. The theory is that it will only "confuse" people.
Sorry Rick. So you LIE. Yes, it si--sorry again, Rick--a LIE the way these weekly numbers are reported ( or the monthly "jobs created" number, also "seasonally adjusted"). Sure, to merely report the "raw" number would be somewhat misleading,, but not the LIE that the present "reporting" repreesents. The wy these numbers are presently calculated and reported presents a FALSE EXACTNESS to these numbers. And that is the real reason for the numbers. Do the people making POLICY just look at the "seasonally adjusted" number, and accept it? I darn sure hope not. I would hate to think even those people are THAT dumb, and I think they are pretty dumb. Nope, Rick, here is the real "position" of you, and the peole who have deivised this stupid system: YOU BELIEVE THAT THE PUBLIC CAN'T HANDLE THE TRUTH. Therefore, you give them the LIE. For example, what if you reported BOTH the "raw" number and the "seasonally adjusted" number, along with the number for the SAME WEEK THE PREVIUS YEAR? Better, right? Actual information, right? But today's media is NOT INTERESTED in providing information, and neither is the government. Notice that the way these numbers are being reported, the public has NO WAY of evaluating whether the "seasonal adjustment" is being done right, or makes nay sense. I know you can go to the Labor Deparment and look at al of the information, but the PUBLIC is not going to do that. It is what a real "journalist" woululd do, and REP:ORT IT. But we don't have any real "jounalists" anymore. Yep. The way the Labor Department does this leaves the numbers open to MANIPULATION. Now is any obivous manipulation being done? I doubt it, only because I would hope SOMEBODY (with enough knowledge to put it all together) is looking at the Labor Department BACKUP information. But I am not totally sure that manipulation can't happen. Note that the media should, along with givnig more PUBLIC informaiton on the "seasonally adjusted" number, compared with the real number, should report the YEARLY number. There should be NO "seasonal adjustment" on a YEARLY basis. One calendar year shoiuld be pretty much equivalent to another. Thus, th ecombined weeekly and monthly numbers should be CHECKED with the YEARLY numbers (the yearly numbes being the numbers which SHOULD be fairly accurate, without any number games). IF the combined weekly and/or monthly numbers do NOT add up close to the YEARLY numbers, then we KNOW that something is WRONG. Eitehr the "seasonal adjustment" is WRONG, or someone is manipulating the numbers somewhere (or botgh).
If I have not convinced you how BADLY this information is being REPORTEDE by our media, assuming no amjor typos on my part, then I think you are the right audience for today's media and politicians. The way these numbers are reproted is a LIE--every week and month--and there is no justification for it. There may be no "manipulation" (I dislike "conspiracy theories"), but the whole thing is nothing but LIES.--starting with the main LIE that these weekly land monthly numbers are CONCRETE and EXACT. They are not. As I showed abvoe, if you were pa8ing attention, the "margine of error" i this weekly number of new unemployment calims could be as high as 100,000. What happens if the "seasonal pattern" CHANGES, so that what happens one week last year happens a DIFFEENT WEEK this year? Look at the above reference to Rick Santelli and the "raw" numbers "jumping around". The weeks Santelli was talking abut were those two weeks where the "raw" number went down 90,000 or so, while the "seasaonlly adjusted number" went down 16,000 or so. That is an obvious POTENTIAL ERROR of 74,000. Why? Obviously the "seasonal adjustment" FORMULA is calcualting that--probably oversimplifying a little--the "normal" weely job loss would have been 74,000, instead of 90,000. But these are BIG numbers. What if the "normal" has CHANGED. so that what happened before does not predict what happened this year? You could easliy get a 70,000 ERROR. That sort of thing happened in an obvious manner a couple of years ago, when the auto industry CHANGED its yearly practive of shutting down plants to retool at the beginning of July., This resulted in at least a 25,000--maybe 50,000--ERROR in the number of new unemployment claims reorted for that week.
If I have not convinced you of anything else, you have to understand that these wekkly jobless claims numbers are UNRELIABLE. , They only become somewhat meaningful OVER TIME--months of time, or even quarters of time.
Meanwhile, are we in a NEW seasonal pattern where the American economy LOOKS better in the second half of every year--especially on employment--than it does in the first haf. In fact, have we reached a point whre the EMPLOYMNENT picture looks much better in the LAST QUARTER than it does in the FIRST NINE MONTHS? That is a reasonable hypothesis. Onyh TIME will really tell. In the meantime, there is NO TREND. We are back essentially where we were at the end of 2010 and first few months of 2011. The "seasonally" adjusted number for this past week was likely above 40,000. Thus, we have had NO IMPROVEMENT in a year, although we have had some "improvement" form the apparently DETERORIATED numbers of this past summmer. You would EXPECT the number next week to go DOWN some, if only because the number this week was UP so very much. Unless the number goes WAY down (in which case you KNOW that the seasonal adjustment was at fault), the four-week average is going to be back above 380,000. Indeed, if the number goes UP next week, we will suddenly be closing in on a four-week average approaching 400,000 again. No tren (yet), no way.
P.S. No proofreading or spell checking (bad eyesight). But, if you can follow the above,you are getting better analysis of these numbres than you get AnYWHERE else.