Busted: Bankers and The Global Economy

February 10, 2011

U.S. Unemployment hits 17.3%

Filed under: business, economy, politics, recession — digitaleconomy @ 11:30 pm

It would seam that the Bureau of Labor Statistics is intentionally understating the current unemployment rate, most likely with an aim to bolstering the Obama administration’s claim that the unemployment rate is improving as jobs are created in a recovering economy.

In a BLS news release on Feb. 4, the unemployment rate was reported to have fallen 0.4 percent to 9.0 percent in January 2011, even though only 36,000 non-farm jobs were created.

The report further claimed the number of persons unemployed in January 2011 decreased by about 600,000, to 13.9 million people, while the labor force was unchanged.

Truthfully, it’s all in the classifications. Tracking down the different definitions of unemployment used by the BLS is an exercise in how the Obama administration lies with statistics.

The monthly unemployment rate report turned out by the BLS defines unemployment as those currently without a job who have actively looked for work in the prior four weeks and are currently available for work.

This definition conveniently excludes from the definition of unemployed those who have grown so discouraged that they are no longer looking for work, as well as those who are considered under-employed because they have been forced to accept part-time or lower paying full-time employment because no other jobs are available.

To get an estimate of these other categories of unemployed, we have to turn not to the BLS monthly unemployment rate press releases, but to a less well-known table produced by the BLS, Table A-15, “Alternative measures of labor utilization.”

Here is the relevant A-15 BLS table for January 2011.

Even a quick inspection shows that unemployment in this table is presented for January 2011, not at 9.0 percent, but as 9.8 percent, listed under “U-3 Total unemployed, as a percentage of the civilian labor force (official unemployment rate).

A difference is that Table A-15 considers a person to be unemployed if they are without a job for 15 weeks or longer, with no requirement that the person be actively looking for a job in the prior 15 weeks.

In other words, a different time frame – a longer look at weeks unemployed – and a less rigorous screening out for those who are becoming discouraged – results in a higher unemployment rate.

But the major difference is that the monthly unemployment rate reported by the BLS press releases is seasonally adjusted – in other words, altered – by a calculation known only to the bureaucrats within BLS.

By the time we get to U-6, the BLS is willing to consider as unemployed all persons including those marginally attached to the labor force, plus those forced to work part time.

Now, looking at the unadjusted U-6 data, the unemployment rate jumps to 17.3 percent for January 2011, not the 9.0 percent originally reported in the monthly BLS unemployment rate press release.

Even here, the number is intentionally understated, largely because workers who are so discouraged that they have abandoned looking for work altogether are by definition excluded from being included in the BLS estimate of how large the labor force truly is.

But the seasonal adjustments and “baseline” recalculations are where the Obama administration gets to manipulate the unemployment numbers to make sure the BLS remains on theme with the current White House spin on the economy.

It is no wonder that economist Jim Fitzgibbon, head of the Highlander Fund, calls the BLS monthly unemployment rate report “worthless,” noting “the entire report is seasonally adjusted to be positive, while the non-adjusted data is just awful.”

So, where the seasonally adjusted unemployment rate dropped from 9.8 percent in November 2010 to 9.0 in January 2011, the non-adjusted unemployment rate went in the exact reverse direction, from 9.1 percent in November 2010 to 9.8 percent in January 2011.

The only BLS number that merits any attention at all is the unadjusted U-6 number from table A-15.

But, clearly, the Obama administration would do anything possible – including manipulating data – to avoid having to admit to the American public that after having spent billions in stimulus funds and trillions in deficits, unemployment in the United States for January 2011 was 17.3 percent.

 

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