According to the Bureau of Labor Statistics (BLS), the latest unemployment numbers show a significant improvement. Should we break out the champagne and brace ourselves for the financial recovery? Perhaps not yet.
News of much better than expected job losses seemed to ease concerns on Wall Street and many stocks moved to the plus side. However, there’s some reason to question the numbers reported. It appears that the government has once again “cooked the books.”
While the BLS reported a decline of only 345,000, much lower than the 520,000 expected, it was adjusted by a somewhat phantom and impossible to measure, factor known as the Birth/Death Adjustment. This shadowy number has been in use since 2003 to make adjustments to account for the number of employable workers estimated to enter or leave the market due to the births and deaths of businesses during a given cycle. Since the actual number cannot be measured, the BLS uses an elaborate formula to “make a guess.”
This time it looks as if their exuberant "guess" may just be a bit off base. For instance, the latest report shows an increase in the “Leisure & Hospitality” industry of 77,000 workers—a number that is difficult to comprehend based upon hotel occupancy at near record lows. The report further shows an increase in construction jobs of 43,000. Where the heck are enough new companies starting to offset business closures/bankruptcies by an additional 43,000 workers? It’s bewildering at best.
Just for comparison, the ADP National Employment Report shows the total job losses to be 532,000, not 345,000. While that’s a significant improvement over the average of 691,000 first quarter job losses, it’s different from the government numbers.
We all know the economy is still a long way from recovery, and it doesn’t help to make business decisions based upon faulty numbers. We need the facts, the unbiased and unclouded facts. To prematurely call the end of the recession helps no one—other than a few politicians whose future is directly linked to a non-existent recovery.
sources: The Bureau of Labor Statistics and chrismartenson.com
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