An addendum, and partial correction, is in order to my previous post on ‘Are the September Jobs Numbers Cooked Controversy’, as follows:
My reference to the Current Population Survey, CPS, surge in jobs by 870,000 last month, and my associating that surge with the labor department’s ‘Business Employment Dynamics’ model, was incorrect. The BED raw data on jobs are added to the labor department’s second jobs data source, the Current Establishment Survey, CES, and then together seasonally adjusted. Those numbers for CES in September were a lower than average 114,000 jobs created, as have been the CES jobs numbers throughout the summer months historically lower the past three consecutive years and subsequently higher the winter months.
For the past two years I had been pointing out that the BED raw jobs data were artificially boosting the CES jobs numbers in the winter months, November-January, and in turn likely artificially underestimating the numbers of jobs in the summer months, May-August. (See my blog, jackrasmus.com, for that argument in detail in my earlier postings on jobs this past winter and in previous winters. My recent book, Obama’s Economy: Recovery for the Few, also documents these excessive swings up and down in jobs for the past three years). I still think that is true and that the CES-BED is generating false seasonal jobs growth—inflated in the winter and deflated in the summer.
If so, what that means is that we will likely see an artificial surge in CES jobs numbers in the November-January months coming up, just as we’ve seen a collapse in job creation in the summers the past three years. That of course does not explain the 870,000 September CPS numbers. So what accounts for the CPS 870,000 is the obvious next question. Is the CPS now picking up numbers that the CES is underestimating in September? Or do we have some kind of parallel seasonality adjustment problems now going on with the CPS as well as the CES? My guess is that the inordinate surge in CPS jobs in September is related to the extraordinary surge of 582,000 involuntary part time jobs in September.
I noted this other possible explanation in my previous post briefly, but without elaborating. This kind of one month growth in involuntary part time is somewhat unprecedented. We haven’t seen a surge of such dimensions in involuntary part time job creation since the jobs crash of late 2008—as companies both laid off full timers in record numbers as they simultaneously converted more other jobs to part time. The 582,000 last month may therefore be a leading indicator of decline in employment in CPS jobs that could come in the next 3-6 months. That means a major ‘switching’ in the two jobs surveys, with CPS jobs contracting sharply in coming months while CES jobs artificially surge over the winter.
Whichever the case, the bigger picture beyond September worth considering is that we are apparently getting increasing divergences and magnitude swings between the two jobs surveys, the CPS and CES. That volatility is not an indicator of a stabilizing jobs market. Quite the contrary. Moreover, something is going on here with jobs calculations in both surveys worth further investigation. It could be that seasonality assumptions and adjustments being used for both surveys, CPS and CES, were perhaps more appropriate in a pre-2007 economy and not today’s very much altered employment market environments. Or it could mean we can expect to see a crash in the CPS numbers soon and a simultaneous moderate rise in the CES jobs numbers in coming months—i.e. the opposite of what’s been happening over the past summer and in September. In either case, the labor department’s jobs numbers will then appear even less convincing.
Jack Rasmus
An Addendum and Correction to My Previous Post on the September Jobs Numbers’ by Jack Rasmus
October 10, 2012 by jackrasmus
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I am speechless at how the little things like this slips through the cracks.
The regulators also allege that the balance sheet of Royal Bank had a deficit of $140
billion, which the bankers dispute. But in Islam believers are also encouraged to keep their money circulating through-out the
community, as zakat and charity indeed, but also complimentary as risk capital.
For example, during the global economic crisis of 2008, many savers
lost money parked in offshore bank accounts in some destinations such as Iceland.