About That Jobs Report…Updated: Jobless claims dropped because BLS omitted California

UPDATE: Last Thursday, the Bureau of Labor Statistics released another report detailing that jobless claims have dropped to a four year low.  According to The Associated Press, “the Labor Department said weekly applications fell by 30,000 to the lowest level since February 2008. The four-week average, a less volatile measure, dropped by 11,500 to 364,000, a six-month low.Applications are a proxy for layoffs. When they consistently drop below 375,000, it suggests that hiring is strong enough to lower the unemployment rate. A Labor Department spokesman cautioned that the weekly applications can be volatile, particularly at the start of a quarter. And the spokesman said one large state accounted for much of the decline. The spokesman did not name the state.”

Besides the fact that most of the net new jobs created last month were part-time jobs, which isn’t a realistic gauge in measuring our recovery, the reason for the massive drop in jobless claims is because the BLS forgot to include California in their report.  Henry Blodget at Business Insider reported that he “spoke to an analyst at the Labor Department. According to this analyst, here’s what happened: ALL STATES WERE INCLUDED in this week’s jobless claims.  Assertions that “a large state” was excluded from the report are patently false.”

Yet, he wrote that:

  • It is likely that some of the jobless claims in one large state–California–were not included in the claims reported to the Department of Labor this week.  This happens occasionally, the analyst says. When a state’s jobless claims bureau is short-staffed, sometimes the state does not process all of the claims that came in during the week in time to get them to the DOL. The analyst believes that this is what happened this week.
  • California claims that were not processed in time to get into this week’s jobless report will appear in future reports, most likely next week’s or the following week’s. In other words, those reports might be modestly higher than expected. 
  • The analyst believes that the number of California claims that were not processed might have totalled about 15,000-25,000. Thus, if one were to “normalize” the overall not-seasonally-adjusted jobless claims number, it would increase by about 15,000-25,000.
  • This week’s “normalized” jobless claims number, therefore, might be about 355,000-365,000, not the 339,000 that was reported. This compares to the 370,000 consensus expectation.

Mike Flynn reported on this development as well and wrote that “the media, of course, swooned at the news. NPR bellowed the report through my car speakers this morning [Oct. 11] and I swear I could hear high-fiving in the background of their studio. You would think we’d posted double-digit growth in GDP for the way the media greeted the news. The long-stalled economic recovery had appeared on the horizon at preciously the moment Obama needed it to.”

Blodget admits that the report still would have tuned positively, but not nearly as rosy as the original report.

We had a jobs report with fudged numbers and now a jobless claims analysis missing data.  As Senator Paul Tsongas, a reasonable Democrat from Massachusetts once said, “if anyone thinks the words government and efficiency belong in the same sentence, we have counseling available.”

[Original post below]

So, we added 114,000 jobs and the unemployment rate dropped to 7.8% – which is the first time the rate has dipped below 8% during the Obama administration.  Some in the media have claimed that this new development has “shattered” the Romney campaign’s main talking point, which is that the unemployment rate has remained above 8% for over forty consecutive months.  Additionally, for twenty-six of the those months, it was above at 9%.

However, at the end of the day, it’s still how people feel about the economy and it’s nowhere near the levels of confidence the Obama camp would like us to believe.  Ed Morrissey postedon October 5 on the main page that something is fishy with the math and he wasn’t the only one.

Morrissey pointed out that CNBC called “the numbers ‘tame,’ but also note[d] the “contradictory” numbers.”  Furthermore, he cited “Bloomberg’s Alex Kowalski [to offer] an explanation that covers most of the confusion.”

Job growth remained tame in September, with the economy creating just 114,000 net new positions though the unemployment rate fell to 7.8 percent.

The report presented a slew of contradictory data points, with the total employment level soaring despite the low net number.

The falling jobless rate had been a function as much of the continued shrinking in the labor force as it was an increase in new positions.

But the government said the total number of jobs employed surged by 873,000, the highest one-month jump in 29 years. The total of unemployed people tumbled by 456,000.

Something’s odd with this report.  Either the household survey (one of the two surveys the BLS uses to compile this report) is way off, or the BLS is underreporting job growth in the overall numbers.


The household survey showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual Census population adjustments. Some 582,000 Americans took part- time positions because of slack business conditions or those jobs were the only work they could find.

James Pethokoukis at the American Enterprise Institute also reiterated the same facts relating to the Bureau of Labor Statistics’ “household survey.”  Furthermore, he claimed that “take-home pay” is virtually flat when you factor in inflation. The U-6 curve – which indicates Americans in part-time jobs looking for full-time employment – has remained stagnate at 14.7%.  Forward Obamabots! Forward!

In addition:

the shrunken workforce remains shrunken. If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where’s the progress? Here is RDQ Economics:

Such a rapid decline in the unemployment rate would be consistent with 4%–5% real economic growth historically but much of the decline is accounted for by people dropping out of the labor force (over the last year the employment-population ratio has risen to only 58.7% from 58.4%).  We believe part of the drop in the unemployment rate over the last two months is a statistical quirk (the household data show an increase in employment of 873,000 in September, which is completely implausible and likely a result of sampling volatility).  Moreover, declining labor force participation over the last year (resulting in 1.1 million people disappearing from the labor force) accounts for much of the rest of the decline.

Additionally, the stimulus package’s predictions remain a sticky wicket for the administration since they calculated that unemployment would bet around 5.6% after spending close to a trillion dollars to ‘boost’ the economy.  Do we have any nails left for the Neo-Keynesian coffin?  Lastly, Pethokoukis states that we’re on track to create less jobs than last year at roughly 146,00 jobs per month compared to 153,000 in 2011.

This lackluster economic news is compounded with the abysmal news that our economygrew by only 1.7% this year.

We’re still not out of the woods.  And to assume that just because we’ve allegedly dipped below 8% in the unemployment rate isn’t indicative of anything positive for the Obama campaign to use against Romney in the next debate.  As it was demonstrated in 2010, ‘it could’ve been worse’ isn’t a campaign message that screams enthusiasm or drives your base to the polls.

Correction: Concerning this jobs report, I must admit that I made a mistake in a previous post with the numbers.  I mistakenly put the estimate at 386,000, instead of 115,000, but some did say that the 386,000 new jobs added in a revision – as of March 2012 – was going to be indicative of a good September report.  They thought wrong.

Originally posted on Hot Air.

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Matt Vespa

I'm a staunch Republican and a politics junkie who was recently the Executive Director for the Dauphin County Republican Committee in Harrisburg. Before that, I interned with the Republican Party of Pennsylvania in the summer of 2011 and Mary Pat Christie, First Lady of NJ, within the Office of the Governor of NJ in 2010. I was responsible for updating his personal contact list. My first political internship was with Tom Kean Jr's. U.S. Senate campaign in 2006.

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