Robert Bush 8:15 p.m., May 19
Be Skeptical of Today's Employment Figures
Wall Street seems to be happy that the nation lost 216,000 jobs in August when economists had expected a loss of 233,000. But be VERY skeptical of that number. Each month, the Bureau of Labor Statistics estimates jobs that have been gained or lost by new and small business. It's called the birth/death adjustment model; it is not seasonally-adjusted. For August, that number is plus 118,000 jobs. But on Wednesday, ADP (Automatic Data Processing) reported that small businesses (those with fewer than 50 workers) LOST 122,000 jobs in August. The ADP report is real-time data. The government's report is simply a computerized estimate. The fact that ADP reports a LOSS of 122,000 jobs in small business while the government reports a GAIN of 118,000 small business jobs strongly suggests some statistical manipulation by government. Giving the government the benefit of the doubt, a realistic job loss for August would be 334,000. That computation simply erases the claim of 118,000 small business. If you assume that small business jobs actually declined, then the August job loss would be more than 334,000. In May, the government reported initially that small business added 220,000 jobs through the birth/death adjustment model; in June it was 185,000. There should be a thorough investigation of these false numbers reported by the government. Prediction: there won't be.
Carlsbad money manager E. James Welsh, reflecting on the reported numbers and the birth/death adjustment model, says, "The consumer [accounting for 70% of the economy] continues to be missing in action." In the second half of this year, the statistics may suggest a sharp recovery of the overall economy because of inventory adjustments, but once they have run their course, the economy has to depend on the consumer. And no matter how the government twists numbers, the consumer remains skeptical.