Faux job numbers could lead to real trouble

[Geee]

Ny Post:

Deception is a dangerous thing. You never really know when a lie may turn on you.

Take, for instance, the Labor Department's annual springtime boost in the faux jobs market. While it's nice that the government thinks there is an employment boom coming, this won't be a good development if that boom turns out to be imaginary yet still causes the Federal Reserve to prematurely tighten credit conditions.

Let's start from the beginning.

Early this month Labor reported that 216,000 new jobs were created in March. It was better than Wall Street expected.


But the figure included 117,000 jobs that the department thinks, but can't prove, were created by newly formed companies that might not even exist. In fact, the department is getting so optimistic about the labor market that it increased this imaginary job count from just 81,000 in March, 2010.

As I've been telling you for months, the spring always causes the Labor Department to goose its job-creation numbers. And maybe sometime in the future this process will be warranted. But during 2009 and 2010 these springtime assumptions -- which are officially called the Birth/Death Model by Labor -- led to major errors in the annual job count.

The next three months should be doozies. In April 2010, the Labor Department guessed that 188,000 jobs were created by these newly formed, maybe nonexistent companies; last May's total job number was jacked up by a 215,000 guess, and June got an artificial boost of 147,000 jobs.

This year, Labor will likely be inserting even bigger faux job totals for each of those three months.

In other words, you still might not be able to get a job in the real world, but there should be plenty of fake jobs for the newspapers to write about and the politicians to brag about in speeches. Why should you care?

[AceRimmer]

This isn't the first column I've seen warning that Wall Street and the Obambi Administration are driving themselves, and dragging us, over a cliff of irrational exuberance based on made-up statistics.

[Pepper]

Geee Acerimmer

 

Related, one problem is with the lower numbers of people seeking work that the White Houses and lame stream media uses to indicate how wonderful things are.

 

If you start off with 1000 people looking for work in month one and just 10% give up each month looking for work, by the end of the year, there's something like only 254 left looking for work.

 

It looks dramatic. So Obozo says "Hey, uhh, Americans looking for work dropped to just 250."

 

Until you realize that 750 gave up. Multiply that by the thousands and you get a feel for the total problem.

 

How's that Hope and Change working out for you?