Today the January Unemployment numbers were released. While on the surface it is good news that the rate declined to 9.0% here is the bottom line. The reason the Jobless Rate declined is because the Census Department removed 504,000 people from the Labor Force. With this decreased number in the denominator of the fraction
UNEMPLOYED / LABOR FORCE = Unemployment Rate the number had to decrease.
1) On the 504,000 decline – as you may have seen, that’s due to a Census adjustment:
“The adjustment decreased the estimated size of the civilian noninstitutional population in December by 347,000, the civilian labor force by 504,000, and employment by 472,000; the new population estimates had a negligible impact on unemployment rates and most other percentage estimates.”
The same adjustment decreased payrolls by 472,000 (i.e. the “disappeared” people had an unemployment rate of just 6.3%, so the remaining population should’ve ticked up). Excluding the Census data, the labor force was unchanged, so I’m still trying to crunch these numbers and get them to agree with the decline in the headline unemployment rate.
The only thing that seems to reconcile the numbers is to (improperly) fail to back out the 472,000, which doesn’t have a “neligible” impact. It lowers the rate from 9.3% to 9.0%. With the seasonal and population adjustments, I’m having a hard time making complete sense of it. If that’s what they did, it was a huge mistake. Seems quite unlikely, but I don’t see how they get 9.0% otherwise.
And notably, the same estimates that were looking for 148,000 new jobs also expected an increase in the unemployment rate to 9.5%. That wild disparity (huge underperformance with a significant improvement in the rate) doesn’t make sense, absent a methodology adjustment that’s not accounted for by the Census tweak.
Hat Tip
Hot Air.com and
Gateway Pundit.
2 comments:
Even so, 9% remains a scarily high figure!
I am having a hard time matching the governments figures. There is no improvement in my rural area and thanks to MSHA and some new EPA regulations the government is trying to implement, there are 2 coal mines close to me on the verge of closing the doors. That's more than 1,000 men unemployed in one shot, in an area that is already seriously economically depressed. This country is in worse shape than Egypt is, why can't Americans see it?
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