Huge Discrepancies Cast Doubt On the Better Than Expected Jobs Report

Mish

The BLS says the unemployment rate fell from 10.2% to 8.4%. Other BLS data casts doubt on the number.

Unemployment Rate Calculation

The unemployment rate is calculated by dividing the number of unemployed by the civilian labor force.

Unemployment Rate = 13.550 million / 160.838 million = 8.42% 

Note that the reported headline jobs number today (+1.4 million) has nothing to do with anything. That is the establishment report number. 

The number of employed (+3.756 million) does play into the calculation, but indirectly, as the labor force denominator.

Labor Force vs Employment

Note that employment rose by 3.756 million but the Labor Force only rose by 968,000. The impact of this discrepancy actually boosts the unemployment rate, but only by a tiny amount.

It's the numerator that matters. The numerator should match continuing claims. It doesn't.

Continuing Claims

Continued State Unemployment Claims Sep 3 Report

The BLS reference week is the week that contains the 13th of the month. That is the week of August 9-15. 

Major Discrepancy 

  • Continued claims for the week ending August 15 was 14.492 million as per the BLS.
  • Yet, the BLS also says the number of unemployed for that week was 13.550 million.

Minimum Number

14.492 million is the extreme lower bound we should see for the number of unemployed. 

Why?

State claims only include those eligible for state unemployment insurance. 

Missing From Continued Claims Number

  1. Gig workers
  2. Self-employed
  3. Those who have not worked long enough to qualify for state benefit requirements
  4. Those who have maxed out the number of weeks the states allow

Primary PUA Claims

Primary PUA Claims in 2020 Sep 3 Report

Pandemic Assistance

Primary PUA claims for the reference week were 13.57 million, an increase of 2.6 Million. 

PUA picks up all 4 categories missing from Continued Claims. But it also picks up some number of part-time workers.

But at least some of those 13.57 million did not work at all. 

For the sake of argument, assume a mere 3.0 million of these workers did not work at all.

Unemployment Calculation

Unemployment Rate = (14.942 Million + 3.0 Million) / 160.838 Labor Force = 11.16%

Other Discrepancies 

I discussed other discrepancies in my Jobs report earlier today.

Part-Time Jobs

Part-Time Reporting Silliness

  • The net of voluntary vs involuntary part-time work is -33,000.
  • Total part-time work rose by 991,000

Don't try to make sense of those numbers as they never add up. I list them as reported.

For details please see Jobs Report Much Better Than Expected, But Is It Believable?

Methodology Change

On top of this mess is a BLS methodology change that artificially lowered the number of initial and continued claims starting yesterday.

For discussion, please see Unemployment Claims Improve But It's a Manipulation Mirage.

I suppose it is possible for the claims revision to be correct, but that still does not account for all the gig etc. workers on Pandemic Assistance that are genuinely unemployed.

Conclusion - Garbage

My conclusion is today's unemployment rate numbers are total garbage.

Mish

Comments (27)
No. 1-15
njbr
njbr

It's all in the service of the market and election campaign--changes included with rose' glasses.

Bottoms up!

Funding resolution deal in the works to prevent a shutdown (Congress fails again to do their duty)!

Hints of a a new round of stimulus (Congress fails to do its duty)!

Trump salutes general (whoops, that was the NK general)!

AWC
AWC

Maybe rioters are considered gainfully employed?

lol
lol

Less than 5% of unemployed are actually counted as unemployed,95% of unemployed are classified as "out of the labor force",they use that scam to keep the numbers down and not payout UE benefits. Just like the inflation "rate' scam,they xclude virtually everything that's goes up in price LOLto keep the rate down so SSA COLA never rises same with the GDP "rate" scam! Obama perfected this scam,and Trump has now embraced it!

Eddie_T
Eddie_T

BLS manipulates the numbers? Well...at least one American tradition continues without abatement.

It seems to work, as far as supporting bubble markets that would otherwise have to be re-priced to reflect reality.......and we can't have that happen. It's been effective since 2008. Why change something that works.

In a month or two these numbers will be revised......but nobody will be paying any attention....other than a few wonks.

rojogrande
rojogrande

I agree the unemployment rate numbers are total garbage, but will they be used to reject or severely limit any further stimulus package? With unemployment dropping this fast can Congress justify spending trillions more without admitting the numbers are garbage? If there is no further stimulus, the "financial cliff" Mish discussed a few days ago may come into play in a big way well before the election.

markwp
markwp

Why only add 3 million from 13.57 PUA claims to get an adjusted unemployment rate? Can you work some hours and receive PUA? Thanks

Tony Bennett
Tony Bennett

From Treasury Department

unemployed benefits paid

July ... $109.418 billion (when $600 week extra paid)
August ... $53.780 billion

Augustthegreat
Augustthegreat

America is getting Greater again, in fabricating good-looking numbets!

rob_abides
rob_abides

Donald Trump himself said the employment numbers were fake before he occupied the Oval Office. Why should we believe his numbers now?

simb555
simb555

Garbage in, garbage out. What else is new.

Casual_Observer
Casual_Observer

Arizona and Colorado senate seats no longer require money from Democrats in order to flip those seats. Money can now be diverted to North Carolina, Georgia, Maine and Texas races. Trump is in big trouble and had another relatively bad week.

PecuniaNonOlet
PecuniaNonOlet

59 days till election. Watched news tonight, saw police evicting people from apartments....

Inst
Inst

This needs to be picked up more and better dissected.

The computed change in the number of employed workers vs last month is 3,756 thousand. Non-farm payrolls increased by only 1,371 thousand workers last month, according to the BLS, or a shortfall of 2,385 thousand jobs.

So what happened? The agricultural sector employs on farms around 2.2 million workers directly, so they'd have to double employment to double workers. Self-employed (gig economy) workers might be another option; i.e, we're overrun with Uber drivers. Then, there's the fact that soldiers and certain government employees are not included in non-farm payrolls. Did Trump just raise 2.4 million soldiers in the "Trump Army" to fudge the unemployment figures? Is this Trump Army going to turn on the US Army should Trump lose? Did Trump just add 2.4 million people to the CIA payroll?

Where are all the missing jobs?

see
see

Like everything esle, NFP has been politicized and rigged to benefit Agent Orange and his hopeless re-election. These numbers especially don't make sense when you have 4 million newly unemployed in the same month.

EconomicLogic
EconomicLogic

Do you have data on what percentage of PUA recipients are working part time to supper your 3rd million guess? I am writing an article on real unemployment for my finance blog about how deceptive the 8.4 percent number is. I am interested in the total paid work hours lost this year, which includes partial unemployment. I've used examples of real people I know with names hidden to show how many would not be called unemployed if called by BLS for an interview. They all think of themselves as unemployed or suffeting from a huge loss of paid hours and income.