In a letter to clients this morning I addressed the seemingly positive jobs data we got this am. I thought I would share an excerpt with all of you:
-There is no doubt that the BLS jobs headline today was good with 243k jobs being added in January and the unemployment rate dropping to 8.3%.
There were however some serious nuances in the report that are not being given the attention they deserve. The largest being the fact that the BLS made some “changes” to their calculations and data sets which has serious ramifications on the numbers .
Here is a unedited paragraph from the report describing some of these “adjustments”:
“The adjustment increased the estimated size of the civilian
noninstitutional population in December by 1,510,000, the civilian
labor force by 258,000, employment by 216,000, unemployment by 42,000,
and persons not in the labor force by 1,252,000.
Although the total unemployment rate was unaffected, the labor force participation rate
and the employment-population ratio were each reduced by 0.3
percentage point.”
When you translate that into English, 216,000 of the jobs added in the month were created by these “changes”; 42,000 jobs get pulled back out of because of the “changes” as well. This essentially means that 174,000 of the 243,000 jobs were just numerical adjustments.
Which leaves about 69,000 jobs were really added in January.
It gets worse when you look at the participation rates adjustments that were made. 1.25 million people left the workforce which is the labor force participation rate. That’s 1.25 million unemployed people who have given up looking for work in the month of January alone.
When you put it all together, 1,183,000 more people were unemployed as of January. I’m not making this up, nor am I trying to be Debby Downer, just wanted to share the facts.
You can read the report for yourself here. I’m not good with numbers 🙂 but something just doesn’t feel right about this data.
PS. The participation rate is the LOWEST since the early 1980’s which means less people are tied to the workforce.
You probably wont read this in the headlines and frankly I’m stunned that the administration is not addressing this further.
