Sunday, July 04, 2010

Everyone Do Your Jazz Hands: Stripping Out Bureau of Labor Statistics' Fudge-Factors Reveals Real Unemployment Rate is 11.8%, not 9.5%

The invaluable Tyler Durden untangled the usual BLS statistical skulduggery to reveal a labor market on life support.

The only reason for the decline in the unemployment rate to 9.5% was yet another decline in the labor force participation rate, which according to the BLS dropped another 652k people in the month of June. This resulted in a labor force to the civilian non-institutional population ratio of 64.7%: the second lowest number in decades of data... As the chart below shows, the double dip in the labor force participation is now very much pronounced.

What this chart implies is that if there was a mean reversion to the last 10 year labor force participation average rate of 66.2%, there should be another 3.5 million jobless added to the 14.6 million tally. And as this differential is the easiest thing in the world for the BLS to fudge, adding the two and dividing by the labor force of 153,74, we get an unemployment rate of 11.8%, leaving aside all other such fudge factors are government hiring, temporary workers, birth death, etc.

Is it any wonder that the "scariest job chart ever" just got uglier?

The American people are truly feeling the powerful thrusts of The Obama Recovery™.

1 comment:

Phil said...

a confusing math typo:

"and dividing by the labor force of 153,74, we get an..."