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January Unemployment at 9.7%? Unbelievable!! February 5, 2010

Posted by geoff in News.
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Economists were expecting 10 – 10.1%, I was expecting something higher, but look at what BLS tells us for the end of January: 9.7%!! I’m pretty shocked, and still trying to digest what all the adjustments made by BLS this month mean to the data. Here’s the chart:

Doesn’t make much sense to me, given that the unemployment filings were so high this month. But even the number of employed people went up:

I’m going to spend a bit of time this morning poring over the numbers, because they’re pretty momentous, if true.

Real-Time Pondering:

  • Hmmm. Table B says that 8000 government jobs were lost, while Table A-8 says that 117,000 were added. (9am EST)
  • So we lost 20,000 non-farm jobs, meaning that we added 520,000 farm jobs? In January? Methinks the seasonal adjustments have gone a little haywire. (9:14am EST)
  • But Table A-8, which doesn’t appear to be consistent with any of the rest of the data, says that we added 59,000 farm jobs, and 559,000 non-farm jobs (9:21am EST)
  • So the seasonal adjustment for January last year was about 1.8 million jobs, while this year it was only 1.5 million jobs. That seems like the right direction for changing the seasonal adjustment based on current economic conditions (i.e., you can’t lay off seasonal workers you never hired) (9:34am EST)
  • All right – I’m baffled. I don’t understand how we can lose 20,000 non-farm jobs, add at most 60,000 farm jobs, and have the unemployment rate drop when the labor pool expanded. As far as I can tell, we should have stayed at 10%. Maybe I’m not following the adjustments or something, but for now I give up (9:58am EST)
  • All right, now we’re getting somewhere. Apparently I’ve been caught trying to reconcile Household survey data with Establishment (business survey) data, and the two aren’t playing well together. I think the Household survey probably had some real issues this time around. (10:24am EST)

[Don’t forget, you can now get the unemployment chart on t-shirts, mugs, and postcards!]

Previous posts in this series:

Comments»

1. kevlarchick - February 5, 2010

The numbers are not accurate. They’ve left out that 3% or so who are “discouraged” and have stopped looking for work, but still continue to enjoy unemployment benefits.

So, when they decide to re-include those discouraged folks, the rate will go up another 3%.

2. geoff - February 5, 2010

They’ve left out that 3% or so who are “discouraged” and have stopped looking for work, but still continue to enjoy unemployment benefits.

But they always do that. This blog was the first I know of to point out that people dropping out of the work force entirely was biasing the unemployment rate downward, and that those people were lost from the employment tracking statistics. But some of those people came back in January.

3. Ella - February 5, 2010

I think they just lie, honestly. It doesn’t matter what the numbers say; the only thing that matters is that percentage. And I think they make it up.

4. Ella - February 5, 2010

Although, it is possible that the unemployment rate drops because a large number of unemployed people exhaust their benefits.

But I think the job number bump and the unemployment rate are both fabricated. “Created or saved,” you know.

5. Herr Morgenholz - February 5, 2010

The most accurate predictor of unemployment figures is, by far, Barack Obama’s standing in the polls.

6. Dave in Texas - February 5, 2010

Keep digging science boy. I’m intrigued and I trust you.

7. Tushar - February 5, 2010

If they are fudging the numbers, it won’t help them politically.

A guy who is pissed off about being unemployed is not going to say, “Hey, I migh be without job, but the employment numbers are looking good! I will vote for Democrats!”

8. CRC - February 5, 2010

This is surely a bullshit number (like the GDP growth). There are probably multiple explanations but the most straightforward is likely from here: http://www.reuters.com/article/idUSTRE6142SH20100205

“A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.”

I know some will accuse me of wanting the news to be bad. Call em jaded but I just think they are fudging the numbers.

9. Neo - February 5, 2010

You really have to wonder about the changes to previous months where the unemployment numbers got much worse.

10. Jdad - February 5, 2010

Just wait a couple of weeks – they will once again adjust the figures to reflect more accuracy. And, usually this means higher unemployment than first reported.

11. HeatherRadish - February 5, 2010

Yeah…I also expect quiet adjustments to the January numbers. Didn’t they just adjust last year’s numbers this week by 850k jobs lost that weren’t reported?

12. toby928 - February 5, 2010

“A guy who is pissed off about being unemployed is not going to say, “Hey, I migh be without job, but the employment numbers are looking good! I will vote for Democrats!”” – Tushar

Yep. The Democrats are finding that it’s easier to talk a good economy down, and instill fear, than it is to talk a bad economy up, and instill confidence.

13. geoff - February 5, 2010

I’m going to have to redo the entire “Jobs lost” chart to reflect the new numbers for 2008. I’ll get to it later…

14. jukin - February 5, 2010

If one decreases the denominator it changes the percentages. Not counting tens of thousands that ‘quit seeking’ makes things look much better.

I’m just an engineer that has to deal with real world numbers that do not get ‘adjusted.’ For some reason I like this table to give a non-biased account:

http://www.bls.gov/news.release/empsit.t15.htm

This shows that the U3 went from 9.7% 12/09 to 10.6 1/10.

The U6 went from 17.1% 12/09 to 18.0 1/10.

Both went up .9 percentage points. Those look like real numbers to the mechanical engineer.

15. TGSG - February 5, 2010

karl D. over at Market ticker has this graph too

16. geoff - February 5, 2010

Both went up .9 percentage points. Those look like real numbers to the mechanical engineer.

Can’t use those – those aren’t the seasonally adjusted numbers. There’s a big difference between the December and January adjustments.

17. BadgerHawk - February 5, 2010

The problem is the huge difference between business data, which shed 20k jobs, and the household survery, which somehow found that an additional 541k (!) people were now working.

Something’s waaaaaaaay off.

18. CRC - February 5, 2010

“Yeah…I also expect quiet adjustments to the January numbers. ”

The key word here is: quietly.

19. BadgerHawk - February 5, 2010

And there’s some talk that about a million people were added to the national population total this month, for whatever reason.

If those people went into the ‘not in the workforce’ pool (even though there’s no evidence that any of them got hired anywhere) it could drive the overall U3 number lower.

20. geoff - February 5, 2010

karl D. over at Market ticker has this graph too

I don’t understand where he got his numbers: the labor participation rate was 64.7% for January.

Something’s waaaaaaaay off.

That was the conclusion I reached in the last bullet point under “Real-Time Pondering.”

21. Tushar - February 5, 2010

OT: India gave the middle finger to UN and IPCC:

http://www.telegraph.co.uk/earth/environment/climatechange/7157590/India-forms-new-climate-change-body.html

No mention of this at Ace’s. DiT, Laura, where are you?

22. BadgerHawk - February 5, 2010

“I don’t understand where he got his numbers: the labor participation rate was 64.7% for January.”

That threw me off too. The bls site has it at 58.4%.

23. geoff - February 5, 2010

That threw me off too. The bls site has it at 58.4%.

58.4% is the employment/population ratio. 64.7% is the labor participation rate (i.e., employment/labor force ratio).

24. BadgerHawk - February 5, 2010

Ah, yeah. Good catch. Silly mistake.

25. TGSG - February 5, 2010

That was my point Geoff, something seriously wrong with the numbers… more digging required.

26. geoff - February 5, 2010

Ah, yeah. Good catch. Silly mistake.

This has been a particularly confusing release, because not only did they do the huge birth/death adjustment, but they changed the format of the data presentation as well.

I think they should have made the adjustment this month and changed the format next month.

27. Koblog - February 5, 2010

One data point label missing from your unemployment chart:

“Jan, 2007: Democrats take over Congress”

28. geoff - February 5, 2010

“Jan, 2007: Democrats take over Congress”

I was at a blog within the past week that had a very interesting chart showing the unemployment rate as a function of which party controlled Congress. The correspondence of prosperity with GOP rule and misery with DNC rule was uncanny.

Can’t remember where I saw it, though.

29. geoff - February 5, 2010

Ah – I found it. It was net federal savings vs. party control, not unemployment. The post is here.

30. CRC - February 5, 2010

I have toyed with the idea of create a website that is like the “wikipedia for time lines” wherein we could start create a huge base of timelines and time based charts that might help us see correlations of things over longer spans of time.

I know that correlation does not prove causation, but first seeing and recognizing correlations (where they do exist) might give us something to investigate to gain more insight into root causes of things.

31. Judge - February 5, 2010

look at the unadjusted U-6 number – it SOARED to 18% this month…

More people lose their job, are out of work, but ‘unemployment’ goes DOWN… Is this a great country or what???

32. Pupster - February 5, 2010

In Soviet Russia, unemployment charts you!

33. dan-O - February 5, 2010

Ah – I found it. It was net federal savings vs. party control, not unemployment. The post is here.

Holy crap, those charts is incredible, especially this one:
http://tinyurl.com/yesh2gr
The key is the mathematical differentiation of the Dem’s years and the mathematical differentiation of the Repubs’s years. The scary thing: the Dem’s spending trends are getting increasingly negative over time, while the Republicans positive trend is staying constant. In other words, if time is shared equally amongst dems and repubs, we are still screwed. They are raiding the treasury.

34. Andy - February 6, 2010

Coupled with Barry’s claims of 2 million stimulus jobs in the SOTU/STFU, it reminds me of this:

“For example, the Ministry of Plenty’s forecast had estimated the output of boots for the quarter at one-hundred-and-forty-five million pairs. The actual output was given as sixty-two millions. Winston, however, in rewriting the forecast, marked the figure down to fifty-seven millions, so as to allow for the usual claim that the quota had been overfulfilled. In any case, sixty-two millions was no nearer the truth than fifty-seven millions, or than one-hundred-and-forty-five millions. Very likely no boots had been produced at all. Likelier still, nobody knew how many had been produced, much less cared. All one knew was that every quarter astronomical numbers of boots were produced on paper, while perhaps half the population of Oceania went barefoot.” ~ George Orwell, 1984

35. Vmaximus - February 6, 2010

Zeke alert!
My destruction here is done, time to sleep.
My destruction here is done

36. Hot Air » Blog Archive » Obama on the stimulus: You’re welcome - February 17, 2010

[…] on the fact that he knows precisely how bad the problem is. We’ve all seen the charts at Innocent Bystanders comparing the White House’s post-stimulus projections for unemployment to the actual numbers, […]

37. Unemployed in MN - February 18, 2010

I was let go in early november and have been looking for a job ever since. You want to hear the irony??? I was recently promoted to the position that was laid off>??!?!?! If I had not been promoted I would not been let go. Ahhh, the irony of life! Obviously I was working way to hard and spending too many weekends devoted to a company that did not view me as important as I thought. I am no longer working weekends and vow to NEVER work another weekend my entire life.

38. Unemployed in MN - February 18, 2010

PS MY figures do not fall under employment because I do not qualify!

39. Just another guy... - March 12, 2010

If you think thats bad, wait till August when the million plus census takers join them on unemployement.

40. Minda Schoenfeld - December 9, 2010

Speaking of toilet seats, why do they make everything so cheap these days? Have to get new ones every two years or so. A little scrub and it’s all chipped. Think we had the same ones all my growing up years.

41. the magic of making up scam - August 24, 2011

I am really impressed together with your writing abilities well with the format to your weblog. Is this a paid topic or did you customize it your self? Either way keep up the excellent high quality writing, it is rare to look a nice weblog like this one nowadays..


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