Yesterday's post focused on the change in sampling methodology utilized by the Census Bureau in gathering data for its "Advance Monthly Retail Trade Survey." If you haven't read that post, please do so; because it will inform you how the mainstream media and our government use data to mislead the end user of such information (IMHO).
Today, I want to focus on unemployment data. This week the Bureau of Labor Statistics (BLS) stated that the continuing, initial unemployment claims were up slightly to 474,000 on a seasonally adjusted basis, which is down 78,000 from the same week last year. Bear in mind, that is on a seasonally adjusted basis. Everyone, that is mainstream media, celebrated the good news. And, that's presumably months after we've emerged from the recession. [Sidebar: I don't like seasonally adjusted data, because those seasonal factors can be very misleading and, of course, manipulated. When I use data for comparative purposes, I use unadjusted, year-over-year data that does not need a seasonal adjustment. It's the real thing!] By the way, the non-seasonally adjusted number (NSA) of continuing claims for unemployment is 665,000, down approximately 95,000 from last year, which is definitely good, but still a very large number.
Ok, back to the mission at had. Everywhere the headlines this week said continuing claims for unemployment are plunging. Once again, let's look at the facts and reality of what is really happening. The drop was not from people getting jobs but from people rolling over to the extended benefits programs, Emergency Unemployment Compensation (EUC), which are not counted in the continuing claims statistic. Isn't that just great? By the way, states pay for the first 26 weeks, and that is where we get the continuing claims number for unemployment. In regard to EUC, states reported 4.2 million persons claiming compensation benefits for the week ending November 21, 2009. Now get this statistic, which should blow your mind. There were 729,256 claimants in the comparable week in 2008. That's right. We have gone from slightly more than 700,000 claimants to 4.2 million. What is happening is that we are simply moving claimants from one pile to another pile and celebrating because the first pile is smaller than the second pile. Can anyone say "Dummy-Down of Americans?"
Here is another statistic that you will not hear or read from the mainstream media. Currently, we have 5.2 million individuals on the continuing claims for unemployment rolls. But, when you add in the EUC numbers, it increases to almost 10 million individuals.
Finally, we all know that the unemployment rate dropped to 10% from 10.2%. To get to 10%, the number of people looking for work had to decline by 98,000. (Basically, if you have not looked for work in the last four weeks, you are said to be "discouraged" and are taken out of the unemployment statistics.) If you add back in the discouraged workers, the rate goes up to 10.5%. And it is worse than that. If you have not looked for a job in 12 months, you are taken off the rolls completely. I finally figured what the government is up to in regard to managing the unemployment rate. (Its that proverbial light bulb going on.) That is, lower the unemployment rate by moving everyone into the "Emergency Unemployment Compensation Program," and then after 12 months these individuals are completely off the employment rolls. Brilliant! Except these individuals are still unemployed, but the government can report that the unemployment rate is zero! You have to love all this statistical creativity by our government.
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