BarroMetrics Views: US Numbers??!
In my view the numbers coming out of the US Bureau of Labor Statistics is fast approaching Chinese levels. They are so distorted that it’s difficult to delineate the hype from reality.
I subscribe to ShadowStats, a service I finds helps make sense of BLS numbers. In the latest report, SS had this to say.
” Following another round of seriously-flawed reporting out of the Bureau of Labor Statistics (BLS)….the issues involve:
- the issues involve upside biases built into the nonfarm payroll survey, as well as
- heavy distortions from highly-unstable monthly changes to the concurrent seasonal factor adjustments used in calculating the headline monthly change in payrolls.
These problems are discussed extensively in Reporting Detail, in the Concurrent Seasonal Factor Distortions and Birth-Death/Bias Factor Adjustment sections.
What is most worrying is the BLS are no longer even following the general direction of the SS unemployment numbers. Figure 1 shows the three types of stats:
- Headline number (U3)
- The number that includes short-term discouraged, marginally-attached workers and those forced to work part-time because they are unable to find full-time employment (U6) and
- ShadowStats Alternate.
You’ll see that whereas once upon a time the levels may have been different, the BLS followed the same trend as SS. But since 2010, we have seen increasing divergence of direction in the BLS and SS numbers.
It is possible that the SS numbers are the incorrect ones – possible but unlikely. But if one takea the trouble to read how both sets are calculated, and one will probably agree that the suspect numbers are more probably the BLS’.
That being the case, at some stage, the BLS will have to return to numbers reflecting reality or lose all credibility. That will make for interesting reading.
FIGURE 1 Unemployment Rate