Non Farm Payrolls Benchmark Revision and the Unemployment Rate as Cruel Farce
Courtesy of Jesse’s Café Américain
Well, we ‘hit’ the projected headline number on the nose, with a loss of 20,000 jobs. No credit to us, it was as much a judgement call (aka SWAG) as any product of careful measurement.
As you may have heard, the BLS did a ‘benchmark revision.’ This is Washingtonian for ‘revised the numbers back as far as anyone might care to remember.’
Here is a simple picture of the old and new headline numbers, back to the beginning of the spreadsheet we happen to be using these days.
[click on charts to enlarge]
The change is subtle, but pervasive. One thing of note is the shoving of more job losses into the past, setting up a more solid base for great job gains in the future, without embarrassing oneself by getting out of synchronization with the actual growth of the civilian population. There will be more ‘truing up’ of the numbers in the future.
Unemployment Rate as Cruel Farce
Regarding that ‘surprise drop’ in unemployment to 9.7%, this is wholly due to people falling off the unemployment benefits radar, and is essentially meaningless, if not downright misleading.
One may as well solve an unemployment problem by shipping people to Australia. Well, that has some historical precedent. Hard to tell who has gotten the better deal on that one, at least over time.
A better measure of unemployment is the Labor Force Participation Rate, which provides information about the total number of people employed as a percent of the population, without benefit of official banishment.
That number continued to drop again in January, from 64.9% to 64.6%.
