Paul Craig Roberts
November 9, 2010
If we cannot trust what the government tells us about weapons of mass destruction, terrorist events, and the reasons for its wars and bailouts, can we trust the government’s statement last Friday that the US economy gained 151,000 payroll jobs during October?
Apparently not. After examining the government’s report, statistician John Williams (shadowstats.com) reported that the jobs were “phantom jobs” created by “concurrent seasonal factor adjustments.” In other words, the 151,000 jobs cannot be found in the unadjusted underlying data. The jobs were the product of seasonal adjustments concocted by the BLS.
As usual, the financial press did no investigation and simply reported the number handed to the media by the government.
The relevant information, the information that you need to know, is that the level of payroll employment today is below the level of 10 years ago. A smaller number of Americans are employed right now than were employed a decade ago.
Think about what that means. We have had a decade of work force growth from youngsters reaching working age and from immigration, legal and illegal, but there are fewer jobs available to accommodate a decade of work force entrants than before the decade began.
During two years from December 2007 – December 2009, the US economy lost 8,363,000 jobs, according to the payroll jobs data. As of October 2010, payroll jobs purportedly have increased by 874,000, an insufficient amount to keep up with labor force growth. However, John Williams reports that 874,000 is an overestimate of jobs as a result of the faulty “birth-death model,” which overestimates new business start-ups during recessions and underestimates business failures. Williams says that the next benchmark revision due out next February will show a reduction in current employment by almost 600,000 jobs. This assumes, of course, that the BLS does not gimmick the benchmark revision. If Williams is correct, it is more evidence that the hyped recovery is non-existent.