The BLS reported last Friday that the economy in September created all of 114,000 net new jobs, just 104,000 in the private sector. To give you some context for how great that is, the working age population increased by 206,000 in September. With a labor force participation rate normal for the fourth year of a recovery (where we are right now), just keeping pace with that population growth would require 138,000 new jobs, before we can even start to reduce the unemployment rate.
Indeed, since Obama became President, the working age population has increased by 8.4 million. At the same labor force participation rate as when Obama entered office, that would require 5.52 million new jobs just to keep pace with that population growth. The total number of net new jobs created since Obama became President according to the BLS: 787,000.
But not to worry. The BLS also reported on Friday that the number of full time jobs actually DECLINED last month by 216,000. Thank you, President Obama. You are doing a great job. Socialism is finally working. Forward. Why would we ever consider turning back now?
So how did the reported unemployment rate fall to 7.8%, down from 8.1% in August, and 8.3% in July? That is because the BLS (might consider dropping the L) also reported that the separate Household Survey, on which the unemployment rate is based, found a giant 873,000 jump in jobs last month, the biggest one month increase in nearly 30 years! That makes sense because the same survey found a decline in jobs of 119,000 in August and 195,000 in July.
Of course, 582,000 of those supposed jobs were part time "for economic reasons." The BLS defines that as "individuals [who] were working part time because their hours had been cut back or because they were unable to find a full-time job." That is not all good either. But a part-time job is better than no job at all.
The supposed sudden surprise spurt in September jobs in the Household Survey provided another gift to Obama. By August, for Obama's entire term in office the economy had created less than zero jobs. In the more than three and a half years from Obama's inauguration until then, the economy in total had lost 86,000 jobs. But the September surprise spurt of 873,000 jobs put Obama in the plus territory for his entire term with a grand total of 787,000 jobs created. Creating 787,000 jobs would be one ordinary month in the Reagan recovery, where the largest gain in one month was 1.1 million jobs in September, 1983. That was not an anomaly then, when the economy was on the way to creating 20 million new jobs in 7 years.
The supposed sudden explosion of Household Survey jobs is inconsistent not only with the 114,000 jobs found in the Establishment Survey of employers. It is also inconsistent with the reported GDP growth of 1.3% in the second quarter, which has been declining for over two years. Monthly job creation of 873,000 would require economic growth 3 to 4 times that large, at least.
It is inconsistent as well with the decline of 216,000 full time jobs found for September. It is inconsistent with the decline of 16,000 manufacturing jobs that the BLS also reported for September, totaling a decline in manufacturing jobs of 38,000 in the last two months. Indeed, the Household Survey September burst of jobs is inconsistent with the prior months of declining jobs in the Household Survey itself. All the rest of this and other economic data is consistent with the reality that we are heading back into recession. Except for the September Household Survey, which is the basis for calculating the unemployment rate 4 weeks before the election.
There's an interview w/John Williams at Seeking Alpha where he discusses this headline 7.8% UE number .
He thinks there's been some wonky seasonal adjustments that caused the reported number to be in serious error as it bears no semblance to reality since it's inconsistent with all the other data including GDP and the establishment survey etc.
Only question is if some deliberateness to the wonky adjustments.
(Might also explain the smiling expression from Obama on debate night when he really had no reason to be smiling)
"Do you think the unemployment rate was manipulated on purpose or did the bad economy just make the reporting more confusing?
JW: It could have been manipulated. I do not know and do not have direct evidence of current political massaging of the data. I know for certain that there have been direct political manipulations by different administrations, since the days of President Lyndon Johnson, involving various data sets that have included the gross domestic product [GDP], the trade numbers and the employment and unemployment numbers.
From what I've seen of the Obama administration, the reporting has been reasonably clean. Nonetheless, at best, the administration is using seriously flawed data, and the reporting and calculation process has the potential for manipulation. The timing of the announcement of such a big downside swing in unemployment certainly is a fortuitous circumstance for the administration's political needs.
Main Street U.S.A., however, has a much better sense on the economic reality than do the government's economic statisticians. If the headline unemployment rate is not as advertised, a goodly portion of the public will not buy it. Past experience has shown gimmicked reporting often backfiring on the manipulators.
TGR: What is the correct unemployment rate? What would be a reliable data set?
JW: I don't know of one. The unemployment rate comes out of government surveying and data manipulation, and the base number is wrong. What are good in theory are the un-adjusted numbers, although unemployment definitions still suffer. Those don't get revised for the seasonal factors. But there you have regular annual patterns of economic activity, so you'll see the unemployment rate go up and down as it follows the normal flow of annual business activity through the various seasons. Even so, it makes some sense to look at that unadjusted series over time. The average person doesn't think of himself or herself as employed on a seasonally adjusted basis, but a lot of people, according to the government, are so employed.
If you surveyed everyone in the country as to whether he or she were unemployed, you'd get an unemployment rate above 22%, instead of the headline 7.8%. The difference is in how the government defines whether someone is unemployed, versus the view from common experience."
see interview w/ 'John Williams On Lies, Damned Lies And The 7.8% Unemployment Rate' at Seeking Alpha for full transcript of interview if interested.