How many jobs did the U.S. economy generate in December?
The correct answer is:
- 292,000
- 281,000
- 11,000
- None of the above
David Stockman wrote on his “Contra Corner” blog: “According to the BLS (Bureau of Labor Statistics), the US economy generated a miniscule 11,000 jobs in the month of December. Yet notwithstanding the fact that almost nobody works outdoors any more, the BLS fiction writers added 281,000 to their headline number to cover the ‘seasonal adjustment.’”
Before “seasonal adjustment.”
After “seasonal adjustment.”
When we checked the jobs report, the BLS claimed that the economy generated 292,000 jobs in December (after seasonal adjustment), not 281,000. We couldn’t verify Stockman’s claim that the actual figure should be 11,000, but searching the term “seasonal” turned up a whopping 41 hits in a single news release. So Stockman’s numbers may not be 100% accurate, but he’s clearly on to something.
The BLS press release noted, “The effect of such seasonal variation can be very large.” But large enough to use a multiplier of 25+?
Stockman wrote that an upward revision for December is typical as an adjustment to account for cold weather, but December 2015 was an exceptionally warm month. Santa arrived in shorts and sunglasses.
Stockman isn’t the only pundit who viewed the jobs report with skepticism. Noting that the BLS also upwardly revised job numbers for October and November by 50,000 per month (a nice, round number), Paul Craig Roberts added that, “Apparently, the equity market did not believe the report.”
Even if you accept the BLS numbers, Roberts wrote that, “About half of the alleged new jobs—142,000—went to the 55 years old and over age group. This age group consists primarily of retirees who have found it necessary to supplement their retirement income and of those near retirement who are working in order to compensate for the lack of interest on their savings due to the Federal Reserve’s zero interest rate policy. These are part-time, lowly paid jobs without benefits.
“Americans of prime working age, 25 years old to 54 year old, only received 16,000 or 5% of the new jobs. Those aged 46 to 54 lost 165,000 jobs. In other words, middle aged people are losing their jobs before they can provide for their retirement.”
Put another way, most new jobs are going to those people who are rejoining the workforce, because they can’t afford to retire—the same people who allegedly have been responsible for the abysmal labor force participation rate, because they have been retiring.
Then There’s the Stock Market
When Roberts suggests that the stock market didn’t believe the rosy jobs report, he’s right. But there are many other reasons for plummeting stock prices.
Until recently, the U.S. economy was a global exception, growing at an annualized rate of about 2% a year. As weak as the recovery has been, the U.S. economy has been stronger in recent years than that of most other countries.
Now the U.S. economy appears to be heading into a recession, while the economies of other countries—especially China—are sinking even faster.
Zerohedge and Bloomberg cited independent Treasury strategist Marty Mitchell as saying, “our concern is that things will only get worse (effects of commodity super-cycle, bankruptcies, debt defaults, hedge fund redemption/failures, global economic slowdown, equity weakness, global debt deleveraging, etc., etc.) before they get better.”
Given the global economic malaise that is weighing on the stock market, the Federal Reserve Board could hardly have picked a worst time to raise interest rates.
We have an idea, though, that could give the market a huge boost. Why not put the BLS in charge? A 300-point drop in the Dow Jones Industrial Average could be reported as a “seasonally adjusted” 100 point gain. Using the BLS multiplier, a 100 point gain could be reported as a gain of more than 2,500 points.
We already call a 10% drop in the market a “correction,” as if it’s a good thing. So what’s a little fudging of the numbers? Maybe Bernie Madoff could do some community service and work with the BLS to get the stock market rolling in the right direction again.