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  • Writer's pictureJacob Rozenberg

The farce behind unemployment numbers

To understand unemployment, one must track the statistics over time. The BLS revised lower prior period employment gains and shifted the gains into December. The revisions are not published until the annual benchmark revision, on which no one follows or reports. Forget about wall street or Marketwatch reporting on this.

As an example of the degree to which the BLS report is not believable, in the BLS data table the BLS shows 38,000 new construction jobs. This is impossible given the decline in both private and public construction spending. However, Challenger Grey - a leading outsource placement agency - publishes an annual job cut report in which it reports that there were 8,822 December layoffs in the construction industry. Not only was this more than in the prior 15 months combined, but it was the highest monthly number of layoffs in construction since Challenger started tracking construction employment in October 2006. The next highest monthly layoff count was February 2007.

Just based on this example, the BLS employment report is entirely unreliable. However, according to the Challenger report, 43,884 employees were laid off in December. To be sure, some of that was seasonal-related workers. But the number was 29% higher than the number of layoffs in December 2017. Seven of 28 industries tracked by Challenger had layoffs of 3,000 or more in December. Furthermore, in 2018 the total number of layoffs was 538,659, which was also 29% higher than the annual number for 2017.

There's several other private sector "checks" which can be used to discredit the Government data, not the least of which are the regional Fed reports which showed manufacturing contracting in December, whereas the BLS claims the manufacturing sector created 32,000 new jobs in December. It's appropriate that Trump's Director of the National Economic Council, Larry Kudlow, stated after the employment report that, "there's no recession in sight." In December 2007, Kudlow argued that there was no recession and the "Bush boom continues." The National Bureau of Economic Research eventually dated December 2007 as the start of the recession back then.

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