Lies And Other Government Statistics

I'd like to get the blog back to more locally oriented posts but I feel compelled once again to try to point out what should be obvious facts and areas of discussion not covered or often even mentioned by the major media or what I call the Zombie Media.



"How can you spot Zombie Financial Media?
No Memory
Contradictions between reports are not recalled or noted.
Previous reports are forgotten shortly after release.
No comprehension:
No two events are related to a shared root cause"

Remember those words every time you hear a widely reported economic figure. Kick the tires, look under the hood, even if you are bad at math, and dazed by numbers like I often am, you will probably be better at it than the government and mainstream media.

Another tip is to write these figures down--- and compare them to later and earlier numbers. Above all-- watch for "revisions".

Initial numbers are always fuzzy estimates and are later revised as harder figures come, like tax and Social Security receipts.

Funny thing is that initial numbers are always page one and revisions on page 28.

"No Memory"

For example here are the headline unemployment figures some months last year and early this year next to the later revised figures.

August 2008: Initially 84,000, revised to 175,000

September 2008: Initially 159,000, revised to 321,000

October 2008: Initially 240,000, revised to 380,000

November 2008: Initially 533,000, revised to 597,000

December 2008: Initially 524,000, revised to 681,000

January 2009: Initially 598,000, revised to 655,000

If you were watching or listening to the news at work or on the drive home, you likely were cheered to hear that the BLS, the main federal agency keeping economic stats says the unemployment rate is down to --- only 10%. The dollar and stocks rose, gold fell and the president called it "encouraging".

But in the same report-- they say 11,000 jobs were estimated to have been lost. This is a small clue! So if 11,000 jobs were lost then the unemployment rate went up right-- unless perhaps the population fell? Well, actually they assume it went up by a small amount so one really has to look under the hood.

But before we start lets get to the mother of all revisions in a little bomb dropped by the BLS in October-- and of course not widely reported.

"The Labor Department said that it planned to revise the job figures by subtracting more than 800,000 jobs that it had wrongly estimated were filled by workers.

The planned revision indicates that this has been by far the worst recession since World War II, causing a 5.8 percent reduction in the number of jobs in this country since employment peaked at the end of 2007.

The decline in private sector employment was even greater, at 7 percent.

The so-called “benchmark revision” that was announced today will not formally be incorporated into the job figures until February, and could be revised. But the figures indicate that last March the government overestimated the total number of jobs by 824,000, or 0.6 percent. Its overestimate of private-sector employment was even greater — 855,000 jobs, or 0.8 percent."

Yes, that's right, these changed figures hack off more jobs than most economists think the so called "stimulus" created. One has to ask why, the government is admitting their numbers are very off while only promising to fully adjust them in February.

Why wait and allow numbers they know are wrong to be widely reported by our Zombie Press?

"Contradictions between reports are not recalled or noted."

"Previous reports are forgotten shortly after release".



Click to enlarge

Even more disturbingly, the BLS or B.S. for short is still putting out data using the same flawed thinking as before.

The key here is the last line on the table labeled, Total Nonfarm Birth/Death Adjustment. Really, this is a number number pulled out of thin air, in an attempt to guess how many businesses are being born and dying in a given period and the number of jobs created by them.

The underlying problem is not hard to figure out, people extrapolate from trends. In normal or "boom" times, the net number of jobs created by new businesses is greater than the number lost by closing ones. But, hello--- every statistic and figure available shows we are in a very serious recession that has hit small businesses particularly hard. It doesn't take a genius to guess that the birth death adjustment should be assuming net job losses among small businesses.

But it's a mighty convenient mistake isn't it?

Now getting to the other big factor in today's reported number. As stated, Even after the 30 thousand jobs the BLS imagines small businesses created, one still has a loss of 11,000 jobs.

But, here the BS people have a different spin. See, according to them only people who actively looked for a job in the last month are counted as part of the "labor force". After all the long term unemployed are conveniently removed, they can report this hopeful and encouraging decline in the unemployment rate.

As a reality check a survey of small business owners released today provides a grim contrast.

The mood of small business owners generally has soured in November for three straight years, as economic confidence dropped from October to November in 2007 and 2008. The November 2008 index of 67.5 is the low point for the Watch since it started in August 2006.

52 percent of owners say they have experienced cash flow issues in the past 90 days, up from 44 percent in October. Forty-one percent of owners say they have not experienced cash flow issues, which is the lowest response in this category since the Watch began. The remaining 6 percent said they weren't sure.

53 percent of small business owners see conditions getting worse in the next six months, up from 43 percent in October; while 19 percent report that conditions are improving, a sharp decline from 29 percent in October; 23 percent see conditions as the same, and 5 percent weren't sure.

62 percent of small business owners rate the economy as poor, an increase from 55 percent in October; 30 percent rate it as fair, and 8 percent say it is good or excellent.

53 percent of small business owners think the overall economy is getting worse, up from 44 percent in October but still significantly lower than the 69 percent of owners who felt that way in February 2009, the last time the Watch index was this low. For November; 28 percent say the economy is getting better, down from 35 percent in October; 16 percent see it staying the same, and 3 percent are not sure.