Friday, August 7, 2009

Non-Farm Payrolls and Its 'Statistical Quirks'

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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When deciding how credible this mornings jobs reports is, you only have to look at one number. According to the Bureau of Labor Statistics, employment in the auto industry went UP by 28,000 last month. Nobody believes this, and I mean nobody, not even the biggest government boot licking financial reporters. Even the mainstream media cautioned that this could be a 'statistical quirk', the polite term in the numbers industry for lying. You should assume that finding one 'statistical quirk' in a report is similar to finding one roach in your apartment. In both cases, there's a lot more that you're not seeing.

The headline number for the report was a loss of 247,000 jobs, which is bad enough as is. July was the 19th consecutive month for job losses. Since the recession has began in December 2007, the government admits that 6.7 million jobs have been lost. Goods-producing industries shed 128,000 jobs, and service-producing industries cut 119,000 jobs, including 44,000 in retail and 38,000 in professional and business services. Unemployment in retail (the largest individual private sector employer) seems to be accelerating. After the 'robust' auto industry gains, health care was the biggest job gainer. Government also added about 7 thousand jobs, but this information was left out of the BLS press release even though it is always reported (when information that has always been available suddenly disappears watch out).

According to the government, the unemployment rate declined to 9.4% (actually 16.3% if you include discouraged workers and involuntary temp workers). You may ask how is it possible for there to be a significant job loss and for unemployment to improve at the same time (could it be another 'statistical quirk')? It's simple - 422,000 people 'conveniently' left the labor force. Even though the O'bama, Bernanke, and Geithner and the BLS in its press release tell us that the economy is improving, large numbers of people are giving up looking for jobs because they think there is no chance of finding one. Somehow, I don't think both of these contradictory views are possible. One of them seems to be a lie - pardon me, I meant 'statistical quirk'.

If you listen carefully to what Obama and Bernanke have been saying for the last several months, you will notice that 'things are getting less worse' is the gist of their statements. The Obama litany is: the financial meltdown has ended (which happened during the Bush administration, but he still takes credit for it), the rate of job loss is slowing, and the stock market is doing better. Bernanke also concentrates on the stock market is getting better theme (and I am sure this is not taking place without some government assistance). The recession is indeed getting 'less worse', although not as much as the government claims. There is also a huge gaping chasm between getting less worse and getting better. However, the government may be able to solve this problem in the future with bigger 'statistical quirks'.

NEXT: The Smoking Gun of the Economic Recovery Scam

Daryl Montgomery
Organizer,New York Investing meetup
http://investing.meetup.com/21

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.






2 comments:

Anonymous said...

Kook, Whackjob, Wingnut, Nut Job, and a Dup. Respectively, Harold Camping, Celente, Roubini, Montgomery, and Me. After careful study, detail analysis, consesus discussions, and seeing the apparent obvious likewise respectively: 1. the end of the world is October 20th, 2011, 2. Obamageddon 2012, 3. V,W,L,U long recession, 4. 2009 Prediction: U.S. Recession turns into Depression and 5. must be true - so many experts are writing/saying about the same!

Shalom P. Hamou said...

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Read "Bernanke's Dark Kingdom."


Abstract:

I am going to show here that central banks have excessive powers which are coherent neither with democratic principles nor with morality. Their existence can not be justified from a mathematical point of view.]

Worse, in light of the exercise of their extraordinary power by Bernanke, I argue that they can pose a real threat to democracy, peace, privacy and individual freedom.

Because of the immediate dangers that are evoked in these lines I strongly suggest that you reproduce my deeds.



My Yield Curve.

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