Government Uses Magic to Fudge Unemployment Data

The Labor Department is out with its unemployment rate and the change in non-farm payrolls.  If you like to challenge the government’s math or accuse the government of fudging numbers, today’s data will add more fuel to your fire.  Personally, I come from the camp that the government cannot adequately organize a parade rather than fall under the spell that the government secretly controls everything under the sun.  Today’s jobs data challenges this belief above and beyond reproach.

Somehow, some way, the unemployment rate for January magically and mysteriously dropped to 9.0% from 9.4% reported in December.  Here is the great mystery: the non-farm payrolls grew by a tiny figure of only 36,000.

Dow Jones had estimates for unemployment to be 9.5% and non-Farm Payrolls to be about 136,000.  The non-Farm Payrolls for December was revised to 121,000 from 103,000 reported initially.  The reality is that it takes well over 200,000 jobs created a month just to offset the new workers entering the labor force.

The discrepancy of this unemployment report seems to be due to the household survey results and weather may have some impact on the data.  The report also showed that there was an increase of 0.4% in average hourly earnings with a slight decrease in the average work week.

The private sector added some 50,000 jobs in January after a revised gain of 139,000 in December. Manufacturing was said to add jobs as did retail, but we would note that retail is usually a calendar event going the other way after firms lay off freshly added workers after the holidays.

The difference in the household survey.  Frankly, this is a phantom drop in unemployment and is just more fodder for conspiracy theorists to show over and over how the government fudges data to make things look better.  There was another drop in construction, warehousing, and in transportation.  Government workers saw a contraction of 14,000 jobs.

Nearly 14 million workers are still unemployed.  The figure keeps creeping lower, but it is due to government math.  If you are out of the workforce for too long, you no longer count as an unemployed person.  Nice math.  More than 40% of the unemployed have been unemployed for more than six months.  That figure is roughly 6.2 million now.

How the Labor Department gets away with figures like this is becoming laughable.  It isn’t political either, because the Labor Department has games with its numbers regardless of who is in the White House and regardless or which party controls Congress.

If everyone in America opens an eBay store or decides to sell Amway products to their friends they must suddenly not be considered part of the unemployment rolls.  Somehow the workforce with the unemployed percentages is much lower.  How we went from 9.8% to 9.4% was fuzzy math.  Now we magically went down to 9.0% despite only a few thousand jobs being created.  Make no mistake about government math.  You are being lied to by the Labor Department, my friend.

JON C. OGG