February 1, 2013

The goldilocks economy continues as January nonfarm payrolls number comes in right as expected, or 157,000, a tiny miss to expectations of 165,000, down from the upwardly revised 196,000 (was 155,000 previously), leading to an unemployment rate of 7.9%, higher than the 7.8% expected. The seasonal adjustment for January was in line with expectations, or 2.120 million, as the actual decline in jobs December to January was a whopping 2.84 million. The NSA Birth/Death adjustment subtracted some 314K jobs in January.

(excerpted)
http://www.zerohedge.com/news/2013-02-01...loyment-rate-79

Using non seasonally adjusted numbers there are now ~30 million Americans who need full time jobs.

Not Seasonally Adjusted
Table A-1
Unemployed: 13,181,000
Not in Labor Force & Need Job: 6,781,000

Table A-15
Working Part Time, Need Full Time: 10,704,000

Total 30,666,000

Note on Table A-1 that the not seasonally adjusted rate of unemployment is 8.5%

Now for the job created myth.

Table B-1
Background: January is the month in which the BLS 'benchmarks', i.e. 'adjusts' the total number of jobs reported in the establishment data re-anchoring them to unemployment records.

Not Seasonally Adjusted
Dec 2012 135,545,000
Jan 2013 132,705,000

Loss 2,840,000 jobs

Thanks for that info, algernon.

It's disturbing.

Quote: musiclady wrote in post #3

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Thanks for that info, algernon.

It's disturbing.

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Thanks again, algernon. I've never had economics (it shows!), so can you explain a little more fully what 'shadow stats' are relative to a set standard of living?

I see in general what this is showing, but wouldn't mind some added information.

Quote: musiclady wrote in post #5

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Thanks again, algernon. I've never had economics (it shows!), so can you explain a little more fully what 'shadow stats' are relative to a set standard of living?

I see in general what this is showing, but wouldn't mind some added information.

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Zitat

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For 30 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.

One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce. Suddenly, their model stopped working,
. . .
my results led to front page stories in 1989 in the New York Times and Investors Daily (now Investors Business Daily)
. . .
the quality of government reporting has deteriorated sharply in the last couple of decades. Reporting problems have included methodological changes to economic reporting that have pushed headline economic and inflation results out of the realm of real-world or common experience.
. . .

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Out of necessity Williams became an expert in the field of government economic reporting. While there always have been modifications to the way unemployment, inflation, and real GDP were calculated, these changes did not have a major impact on the results until the mid 1980's. At that point changes in methodology had a major impact on the results and started moving government economic reporting into lala land.

Williams' web site was started in 2004. He sells services and offers a lot of free information. Williams uses blue lines to indicate his best approximation of the statistics if they were calculated the old way. The red line indicates the statistics calculated by the government.

I have researched Williams' claims about the changes to methodology and verified them. Not an easy task since the government tend s to make such information difficult to locate.

Here's a brief summary of how government statistics have been corrupted.

Unemployment
A major rewrite of the way unemployment statistics are presented and calculated was released in 1994. It had been in the works for several years. The number of U's were changed from 7 to 6. As of 1994, if you are long term discouraged you are moved out of the civilian labor force.

The major ways the unemployment rate is manipulated are seasonal adjustment and determining which bucket you belong in, e.g. are you part of the civilian labor force.

CPI
The CPI was set up to measure a set standard of living. The calculation of the CPI was adjusted to accommodate new consumer products as they hit the market, e.g. TV, flat screen TV, cell phones.

Since the mid 1980's the CPI has been changed to represent the cost of a declining standard of living through the use of several methodology changes including (but not limited to):

Substitution Effect: The theory is that if the cost of something goes up you will substitute a cheaper item and the cost of living did not go up. An example would be if the cost of a certain cut of beef went up you would substitute a cheaper cut of beef; therefore there was no inflation.
Renter's Equivalence: Instead of the actual cost of owning a home, the cost of renting is substituted. See those increased real estate taxes never happened.
Intervention Analysis: If the cost of say gas goes up "too much" a statistical tool is used to bring down its effect on the CPI.
Hedonics: If a quality improvement increases the cost of an item, the actual cost is lowered by the perceived pleasure the consumer receives from that improvement. An example is a government mandated change to gasoline for cleaner air increases its cost. That additional cost is removed in the CPI calculations because of your increased pleasure in the clear air.
Core Inflation: Core inflation does not count the cost of energy and food (because they are so "volatile"). This is also called headline inflation. It is the number the government, the Fed, and the media bandy about. It is also the number used to determine how well the federal reserve does its job in controlling inflation.

GDP
Since real GDP is created ay applying the CPI, the more the CPI under reports inflation, the more the real GDP over states Gross Domestic Product.

In addition the GDP includes government spending, so the larger percent of the GDP represented by the government , the more the GDP over states production.

If anything I posted is unclear or confusing I will try to clarify.

Not sure if you heard algernonpj, Williams has gained a new fan (and customer!) a week or so ago. Mark Levin was telling his audience what a fantastic web site someone recently told him about, it was Williams' shadowstats.com! He told us that he would be subscribing (even though it is very pricy) because he has developed a great deal of respect for Williams' methods, research, and clarity. So I expect to hear more about Williams' work on Mark's show in the coming days.