(UPDATE here)
To say the least, it is counterintuitive when the government admits that job losses in 2009 were far worse than previously reported (this revision was anticipated) but that the unemployment rate has dropped to 9.7 percent. Tyler Durden at Zero Hedge comments:
The January NFP number came in at -20,000, a mere 5k away from Goldman’s -25,000 estimate. Consensus was for +15,000. December, as all prior months, saw an expected major downward revision to -150,000 from -85,000. The January Birth/Death adjustment was for -427K from +25K in December. Despite a deterioration in every metric, the unemployment rate dropped from 10.% to 9.7%, even with a consensus at 10.0%. A glitch in the excel model is further corroborated when one considers that the civilian labor force participation rate actually rose in January from 64.6 to 64.7.
All I can say is they’ve managed to make the numbers come out. Oh yes, and because I still don’t have a job, I don’t really believe it. Durden doesn’t either:
Yet a number that avoids some of the constant fudging by the BLS, the Non-Seasonally Adjusted number, hit a new recent record: instead of 9.7%, this number was 10.6%, a 0.9% increase from December!
The same can be seen in the U-6 data. NSA U-6 is now at a record 18%, even as the seasonally adjusted number declined to 16.5%.
Durden and I are far from alone. The best the Associated Press could say for the report was that “the outlook for jobs remains bleak despite January’s unexpected decline in the unemployment rate, which fell to 9.7 percent from 10 percent in December.” Andrew Leonard at Salon.com promised “more analysis later today, as we try to figure out why exactly the unemployment rate dropped, even as job losses continued.” That was a half hour after the Bureau of Labor Statistics released the numbers. I’m still waiting.
Supposedly, 541,000 more people had jobs in January. That almost makes up for the drop of 589,000 in December. But there’s another graph of the percent change in numbers of people excluded from the labor force I look at that helps me understand this stuff:
So another piece of the story is a spike in the number of people whom the Bureau of Labor Statistics has been excluding from the labor force. There was actually a fairly significant drop last month, but overall, the Bureau of Labor Statistics has been excluding people at a strikingly high rate. 111,000 more people were included in the labor force in January than in December, but with a population decrease of 92,000, that adds up to a drop of 202,000 in the number of people excluded. The population decrease is a fluke (the birth/death adjustment Durden refers to) that has appeared every January and only in January since the recession began (I don’t know before) and the population decrease is actually smaller this time.
Overall, we have about eight million fewer people employed than at the beginning of the recession in December 2007. At this point, I’m paying a lot more attention to what the market looks like from a job hunter’s perspective. That means I–and people around me–discount any good numbers and believe the bad. I started keeping track of the statistics on my own because I just wasn’t believing the spin. I still don’t, and it’s always interesting to take a look over at Shadow Government Statistics; he’ll probably have a comment later today–if I snag it, I’ll update this entry accordingly.
The picture is too weird. There’s been some dichotomous thinking about relief for the unemployed and tackling budget deficits that I think masks a much more nuanced policy.
Paul Krugman’s column raises an interesting question:
To me — and I’m not alone in this — the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war. Now, as then, dubious allegations, not backed by hard evidence, are being reported as if they have been established beyond a shadow of a doubt. Now, as then, much of the political and media establishments have bought into the notion that we must take drastic action quickly, even though there hasn’t been any new information to justify this sudden urgency. Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalized.
Krugman insists that “if anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs.” He’s not wrong. As if in response, the AP wrote, “Many economists say businesses are reluctant to add workers because it’s not clear whether the recovery will continue once government stimulus measures, such as tax credits for home buyers, fade this spring.” If the capitalists aren’t hiring, and government isn’t hiring, then who will?
But instead the Labor Department is preparing Congress for a spike in the unemployment rate, saying not to worry. They’re apparently planning to attribute it to people returning to the job market as conditions supposedly improve. I guess that’s why it makes sense to exclude all those people in the first place.
We already know what Obama’s response to high unemployment: “There are limits to what government can and should do, even during such difficult times.” Obama’s team seems far more interested in pretending to tackle budget deficits than in offering anything more than empty platitudes about unemployment. And it has been astonishing to hear, almost every month, about how job losses are slowing and that recovery is just around the corner; as the AP put it this month, “January’s report offers hope that employers may start adding jobs soon.” This narrative surely decreases the pressure on Obama to do anything real about jobs; according to the AP, he said of today’s data, that it is “cause for hope but not celebration.” But only he and his mainstream media enablers seem to believe it. I can’t help but suspect the data has been manipulated.
But Krugman also compared the disinformation now being spread far and wide to that spread in advance of the darling war of neoconservatives: Iraq. I don’t think he realizes what he’s stumbled over. While Obama wants to cut non-defense spending, Todd Harrison, a defense budget expert at the nonpartisan Center for Strategic and Budgetary Assessments, observes:
This administration hasn’t cut defense spending at all but increased it to record levels, and it looks like for the foreseeable future defense acquisitions are going to continue increasing. What happened [on February 1] was people started to realize, “Hey, this president isn’t bad for the defense industry.”
Indeed he isn’t:
[Defense Secretary Gates] is saying that we need to place a greater priority on the wars that we’re in today and the most likely threats of the future, but that inherently means that other things must be lower priority. If you’re actually going to prioritize things other things, things have to be moved down [the priority list]. We’re not seeing evidence of that in the budget. There aren’t any major weapons systems that are terminated, nothing new, and there’s no real indication of where the department intends to take risks. That is, where’s the department going to do less, or where is the department going to go without something in order to focus resources more on new priorities? We’re not really seeing that in this budget. What that shows is that this rebalancing is not that great of a shift after all.
Assuming Obama succeeds in ramming through health insurance reform, the health insurance industry will benefit from millions of new customers, mandated to purchase lousy insurance they can’t afford. The banking reform legislation that emerges from the Senate is unlikely to be anything like what is needed, both parties are now competing for Wall Street’s support, and for all his lovely rhetoric, Obama supported the bailout from the beginning. Now we’re seeing the interests of the military industrial complex protected at the expense of what’s actually needed to fight a foolish war.
Noam Chomsky interprets the Massachusetts Senator election results to mean that “for the wealthy, [Obama] was not doing enough to enrich them further, while for the poorer sectors, he was doing too much to achieve that end.” I don’t agree with Chomsky that the recent Supreme Court decision will open the floodgates to corporate influence much more than they are already open, but the decision certainly does nothing to restrain that flow (here yet again, Obama offers worthwhile rhetoric that is not matched by deeds). I think this corporate take-over of U.S. politics, whenever and however we might argue it began, dovetails with so-called “centrist Democrats” who are hawks on budget deficits and who are also hawks on so-called “defense” (“Blue Dogs” are explicit in saying so). It’s really starting to look like, far from being an obstacle, Joe Lieberman is the economically disastrous Obama administration‘s number one ally on Capitol Hill.