S&F, awesome post! Thank you..great way to put things into perspective.
I wish that shadowstats wasn't such an expensive site.
NBER declares 'conclusive evidence' of US recession as (real) unemployment soars, page 1
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Topic started on 7-11-2008 @ 06:24 PM by anachryon
NBER - the National Bureau of Economic Research - are the folks who make the official proclamation as to the country's recession status. Today they
quietly came out and confirmed what most of the country has known for awhile now:
It's a recession, stupid!
Bloomberg
As mentioned in the article, today's job report - 240,000 jobs lost in October - helped drive the point home.
An important factor to keep in mind regarding the job report is that the figure released this morning is preliminary; it can and will be revised in the near future. A clear example of this can be found in this article from Forbes
As you can see, September's preliminary job loss number was 159,000. Today it was quietly revised upward by 125,000 lost jobs to a total for the month of 284,000.
When October's revised numbers are out in the next month or two, don't be surprised to see an actual number approaching 400,000 lost jobs.
How accurate are the unemployment numbers, anyway?
The 6.5% number released today doesn't quite count everyone. Another view can be found courtesy of the Bureau of Labor Statistics. Take a look all the way at the bottom under the U6 line:
These workers were included in the official unemployment numbers before the 1960s, when President Kennedy removed this classification from the U3 numbers. In 1994, a further class of workers (marginally attached over 12 months) were removed from the rolls under President Clinton, as well as reducing the sample size from 60k homes to 50k; a "disproportionately large number" of those dropped were from inner cities. (info from same article linked above)
Those interested in true historical data should then use the U6 figure to most accurately compare today to yesterday.
In addition, the unemployment percentage is also influenced by something called the Birth/Death Model. No, it doesn't have anything to do with potential workers dying; it has to do with the assumption that small companies and brand-new companies may have created jobs without the data reaching the BLS.
This month, the BLS estimates that 7000 new jobs were gained in construction (building what?), 13k added in financial services (banks, etc), 43k added in professional & business services, and so on. These numbers are based on a computer model that works okay during normal economic times, but fails miserably in economic downturns.
Mish Shedlock explains things well:
This shouldn't come as much of a surprise to anyone on ATS. Government manipulation? Who'da thunk it??
It's a recession, stupid!
Bloomberg
The Stanford University economist who leads the panel that dates economic cycles said there is now no doubt that a recession is under way following today's jobs report.
The committee is waiting to determine the exact start date of a contraction.
As mentioned in the article, today's job report - 240,000 jobs lost in October - helped drive the point home.
An important factor to keep in mind regarding the job report is that the figure released this morning is preliminary; it can and will be revised in the near future. A clear example of this can be found in this article from Forbes
According to the government data, unemployment climbed to a 14-year high of 6.5% in October, and nonfarm payrolls shed 240,000 jobs. More stunning was the revision to September's report, which initially said employers trimmed 159,000 jobs. Friday's update showed a decline of 284,000 jobs for September.
As you can see, September's preliminary job loss number was 159,000. Today it was quietly revised upward by 125,000 lost jobs to a total for the month of 284,000.
When October's revised numbers are out in the next month or two, don't be surprised to see an actual number approaching 400,000 lost jobs.
How accurate are the unemployment numbers, anyway?
The 6.5% number released today doesn't quite count everyone. Another view can be found courtesy of the Bureau of Labor Statistics. Take a look all the way at the bottom under the U6 line:
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached work : 11.8%
These workers were included in the official unemployment numbers before the 1960s, when President Kennedy removed this classification from the U3 numbers. In 1994, a further class of workers (marginally attached over 12 months) were removed from the rolls under President Clinton, as well as reducing the sample size from 60k homes to 50k; a "disproportionately large number" of those dropped were from inner cities. (info from same article linked above)
Those interested in true historical data should then use the U6 figure to most accurately compare today to yesterday.
In addition, the unemployment percentage is also influenced by something called the Birth/Death Model. No, it doesn't have anything to do with potential workers dying; it has to do with the assumption that small companies and brand-new companies may have created jobs without the data reaching the BLS.
This month, the BLS estimates that 7000 new jobs were gained in construction (building what?), 13k added in financial services (banks, etc), 43k added in professional & business services, and so on. These numbers are based on a computer model that works okay during normal economic times, but fails miserably in economic downturns.
Mish Shedlock explains things well:
There is simply no way in a real estate crash that net new construction businesses are added. Note that are there net new professional and business services when mortgage and financial activity is collapsing.
For those unfamiliar with the birth/death model, monthly jobs adjustments are made by the BLS based on economic assumptions about the birth and death of businesses (not individuals). Those assumptions are made according to estimates of where the BLS thinks we are in the economic cycle.
The BLS has admitted however, that their model will be wrong at economic turning points. And there is no doubt we are long past an economic turning point.
This shouldn't come as much of a surprise to anyone on ATS. Government manipulation? Who'da thunk it??
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