The truth about the BLS jobs report

There are a few things to keep in mind as you read the Bureau of Labor Statistics (BLS) job numbers each month and listen to the news reports about what these numbers mean:

1. You will hear a lot about the month-to-month net job creation which BLS says was 69,000 from April to May.  Don’t give too much emphasis on any single month.  The important thing is the TREND over time.  The following charts from the BLS report provide some perspective.  See the charts here or below: http://www.bls.gov/news.release/pdf/empsit.pdf

In Chart 1 you can see that the unemployment rate has been trending down since about October in 2010.  That’s the good news.  However, in Chart 2, you can see that even though we have been adding jobs since then during last year and this year the early months of the year have been better than the summer months.  We may be seeing the same pattern. 

2.  Recognize that the BLS numbers are ESTIMATES based upon a sample of establishments and a household survey.  Consequently, we have to consider the sampling error which BLS says is +/- 105,000 jobs.  That means that the actual jobs created in May could have been as low as a NET LOSS of 36,000 to a NET GAIN of 138,000.  This sizable sampling error is another reason NOT to pay too much attention to month-to-month changes particularly if they are LESS than 100,000 jobs.

3.  The sampling error for categories of employment (heath care, manufacturing, etc.) or worker (adult men, adult women, Blacks, etc.) are EVEN GREATER than the sampling error for the entire report.  Here again, trends matter more than individual month-to-month changes particularly if these changes are not substantial.

4.  Recognize that BLS makes adjustments to the numbers to correct for inaccuracies in the sampling and for other reasons.  The intention is to make the estimates more accurate but there is a lot of debate about whether that is the case.  For example, BLS uses a birth/death adjustment to account for business start-ups and closures.  See here: http://www.bls.gov/web/empsit/cesbd.htm  That model was changed in 2008, after the recession hit and some people claim that the 2008 changes cause the BLS estimates to be UNDER estimating new job creation. 

5.  Pay attention to other estimates of unemployment out there.  For example ADP provides an estimate for the non-farm private business sector each month which usually comes out just before the BLS report.  ADP said 133,000 were created in May, considerably more than BLS estimated.  Steven Hansen at Global Economic Intersection endorses the ADP method over the BLS result. He says ADP is a better estimate.  See: http://econintersect.com/wordpress/?p=22511.  Over time the trends shown by the  ADP and BLS estimates tend to similar but there can be a lot of month-to-month variation.  Also, Trim Tabs provides an estimate of job creation based upon an analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees which it says is historically more accurate than initial estimates from the BLS.  Trim Tabs estimated that 124,000 jobs were created in May, considerably higher than the BLS estimate.

BOTTOM LINE: When it comes to understanding what is happening in the jobs market focus on trends and take a look at multiple estimates. And, learn to live with uncertainty and imperfection in the jobs numbers. 

May Jobs Report—What it means

The Bureau of Labor Statistics said today that the country added only 69,000 jobs in May (compared to an average gain of 226,000 per month during the first quarter) and the unemployment rate ticked back up to 8.2% from 8.1% due to an increase in the number of people looking for work.  The latter had been expected.  People who give up looking for work and drop out of the labor force usually return once the job market appears to be improving.

Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction.  Other areas remained largely unchanged.

Unemployment among adult men (7.8%) and adult women (7.4%) were up slightly for April.  Unemployment among teenagers (24.6%), Blacks (13.6%) and Hispanics (11%) remained high as did the number of long-term unemployed which rose from 5.11 to 5.4 million.  The long-term unemployed (over 26 weeks) now account for more than 40% of the unemployed.

The good news is that the private sector continues to add jobs but not at a rate sufficient to make much difference in the unemployment rate.  Also, the state and local government continue to lay off workers making the jobs recovery even more difficult.

This recession appears to be following the pattern of the last two recessions.  Traditionally during a recession we would see a “V” shape sharp decline followed by an equally sharp recovery once the recession ended.  In this recession like the last two in the early 1900s and early 2000s, has followed more of a “check mark” shape with a sharp decline followed by a gradual recovery.

Several things seem to be causing the slow recovery.  First, the impact of the 2009 stimulus is now almost entirely gone and we are seeing the consequences of not enacting a second stimulus to aid the recovery which most mainstream economists had urged.  Second, during this recession businesses have been able to introduce a substantial amount of new technology and to demand more from existing workers.  As a result, we have seen sharp productivity gains.  Demand has not returned to a level in many industries where businesses are forced to hire more people.  In fact, the average workweek in May for all employees actually DECLINED slightly to 34.4 hours.  We are not going to see major improvement in jobs until the average workweek starts climbing again.  That will not happen until demand improves.  Again, it is why we have needed a second stimulus to pump more demand into the economy.  Ironically, the U.S. government continues to be able to borrow at extremely low interest rates which would have made it relatively easy to fund a second stimulus (10-year Treasury notes hit a record low of 1.54 percent on Thursday).  Finally, the economic situation in Europe is not helping.  Businesses with European operations are seeing their revenues/sales fall and are nervous about the future.  Indeed, the deteriorating situation in Europe, particularly in regard to Greece, Spain and Italy, which is a product of an over reliance on austerity rather than stimulus and growth measures, threatens the U.S. recovery.

Obviously, the sluggish jobs recovery is bad news for Obama and good news for Romney but it is too early to say how great an impact it will have on Obama’s chances for re-election.  Right now the race is tight in the popular vote but Obama retains a substantial lead in the Electoral College vote, which is what really counts.  I don’t think we will have any clear indication of how this election will turn out until after Labor Day and perhaps not until the end of September.  If the jobs picture remains close to 8% and, particularly if the trend is flat or not improving, then Obama may be in real trouble.  Unfortunately, the only thing Obama could do to change the situation would be to pass another quick stimulus which is not remotely possible. 

See the full BLS report here:  http://www.bls.gov/news.release/empsit.nr0.htm

Judge blocks enforcement of Florida Republican voter suppression law

The Brennan Center for Justice has reported that a federal judge has issued an order today BLOCKING the enforcement of key provisions of a law Republicans passed to make it difficult for groups like the League of Women Voters to conduct voter registration drives in Florida.  This from the Brennan Center:

A federal judge blocked enforcement of key provisions of a restrictive voting law in Florida today, a breakthrough victory for Florida voters and voting rights advocates nationwide.

The law, H.B. 1355, included onerous restrictions on community-based voter registration drives, forcing the League of Women Voters of Florida and other groups to shut down their drives. In his decision, U.S. District Judge Robert Hinkle found that the Constitution and federal law prohibit most of Florida’s recently-passed restrictions, and highlighted the law’s impact on the Plaintiffs’ constitutional rights.

“Together speech and voting are constitutional rights of special significance; they are the rights most protective of all others, joined in this respect by the ability to vindicate one’s rights in a federal court. … [W]hen a plaintiff loses an opportunity to register a voter, the opportunity is gone forever,” U.S. Judge Robert L. Hinkle wrote in his opinion blocking most of the Florida law. “And allowing responsible organizations to conduct voter-registration drives—thus making it easier for citizens to register and vote—promotes democracy.”

Read more here: http://www.brennancenter.org/content/resource/suppressive_voting_laws_take_hit_federal_judge_blocks_florida_law/

BREAKING NEWS: Edwards NOT GUILITY

The jury found Edwards NOT GUILTY on one of the six counts and mistrial on other counts.  

Read more: http://news.yahoo.com/blogs/ticket/john-edwards-verdict-not-guilty-guilty-jury-183230275.html

Listen to the Attack Democrat on talk radio

Click here http://www.blogtalkradio.com/powerful-patient/2012/05/31/getting-things-done-in-washington or below to listen to my interview on the Powerful Patient talk radio show today where I discuss health reform and the future of the Affordable Care Act.

Listen to internet radio with Powerful Patient on Blog Talk Radio

BREAKING NEWS: Federal Court declares Defense of Marriage Act unconstitutional

The U.S. Court of Appeals in Boston today struck down as unconstitutional Section 3 of the Defense of Marriage Act, which defines a marriage as a union of people of opposite sexes. The plaintiffs claimed it was discriminatory because federal benefits were denied to same-sex couples married in Massachusetts.  The court agreed deciding that the Act unfairly denies equal benefits to legally married same-sex couples.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/05/31/bloomberg_articlesM4W5AO6TTDS001-M4W7A.DTL#ixzz1wTFGjqhh

http://www.latimes.com/news/politics/la-pn-doma-appeals-court-20120531,0,4385237.story

Church members applaud as 4-year old sings gay-bashing song.

The good members of the Apostolic Truth Tabernacle in Greensburg, IN gave a standing ovation to a four year old as he sang ‘Ain’t No Homos Going To Make It To Heaven’.  I’m not kidding.  We’ve made some progress on civil rights and just plain decency in this country but it is stuff like this that reminds us we still have a very long way to go.

See the video below or at this link:  http://www.addictinginfo.org/2012/05/30/four-year-old-sings-aint-no-homos-going-to-make-it-to-heaven-receives-standing-ovation-video/

Children singing in Church to enthusiastic... by f100001838231867

Does Romney’s proof of citizenship meet birther standards?

Birthers have repeatedly questioned Obama’s citizenship.  One line of argument is Obama produced a “Certificate of Live Birth” as proof that he was a natural born citizen, not a “birth certificate.”  See the following typical birther rant:

Personal message from a reader dated Oct. 28, 2008:

[T]he Obama campaign did finally present a document which they claimed validated his eligibility (per the Constitution of the United States, Article II, Section I) as a "Natural born citizen" to have his name on the ballot in contention for the office of the President of the United States of America. However, contrary to what the few media outlets who are giving this outrageous claim any attention at all have concurred, what the Obama campaign supplied was not, in fact, a "birth certificate". What they supplied was actually a "Certificate of Live Birth." There is a major difference between a "birth certificate" and a "Certificate of Live Birth." Aside from the level of detail differentiating the documents (hospital of record, doctor, height, weight, etc) - in the state of Hawaii, one authenticates natural born citizenship, and the other doesn't.

Now Romney has come forward with his own proof of citizenship.  So, let’s compare the two.  

Oh, my.  Has Romney produced a "Certificate of Live Birth" rather than a "birth certificate?"  Looks like it.  Hey, birthers.  You got another problem here.

Obama is the most moderate president

Republicans portray Obama as being a radical liberal, if not outright socialist.  So, how liberal is Obama compared to other U.S. presidents?  As it turns out, Obama is pretty much a moderate.

In a recent study, political scientists Keith Poole and Christopher Hare at the University of Georgia examined roll call votes in Congress in which the sitting president expressed clear support or opposition for a specific bill to determine how liberal/conservative presidents were in their policy positions going back to Truman.  See here for an explanation of the methodology: http://www.voteview.com/dwnomjoint.asp

Poole and Hare determined that “President Obama is the most moderate Democratic president since the end of World War II, while President George W. Bush was the most conservative president in the post-war era.”

The chart below and here http://voteview.com/blog/?p=317 shows the ranking of ranking of all presidents since Truman.

Check it out.  Obama is just about as much a liberal as Ike was a conservative.

Listen to the Attack Democrat on national talk radio

The Attack Democrat recently appeared on the Small Business Advocate Show with Jim Blasingame.  Listen below:

How much should the federal government get involved in our lives?

Should the federal government have done more to stimulate the economy?