If you are a long-time reader of Smart Investing Daily, you know my predictions on the monthly Bureau of Labor Statistics (BLS) jobs report are pretty accurate.
Headlines declare that the unemployment rate dropped again this past month. There were many experts who thought we would see a rise in unemployment. So perhaps the “seemingly” positive data was a main driver of the recent stock market rally in the face of not-so-strong economic data here in the States, the catastrophe in Japan and revolution in the Middle East.
It is true (I think?) that 216,000 jobs were added last month and that number does seem to be growing each month, but when I hear quotes of 8.8% as our national unemployment rate, I just cringe!
It pains me to see people get misled day in and day out. I know that in my own life I wish everyone I met would tell me the raw truth. But we all know that the truth is often polished, augmented, twisted or thrown away altogether.
Being cordial is one thing, but when masses of people are “taught” to believe a partial truth that has direct ramifications on their monetary and social well-being, a line must be drawn.
A “Peculiar” Figure
The percentage number we are told is the official unemployment rate is called the “U3″ measurement, which doesn’t calculate the full unemployment picture. It actually measures the amount of unemployed workers divided by the people in the participating labor force.
The devil is in the details in how they define “unemployed workers” and the participating labor force itself. I’ll show you how this can present a serious statistical conundrum in just a moment.
There are several measurements that the BLS (Bureau of Labor Statistics) offers us, as noted in the chart below. As a total figure, U3 is the most limited in scope and is about Read more
…Friday’s nonfarm payrolls report was much worse than expected, hence the market’s very bearish reaction. Only about 20,000 “real” permanent jobs were added in the month of May. The Bureau of Labor Statistics noted that 411,000 of the 431,000 jobs were temporary positions associated with the 2010 Census.
In May, the civilian labor force participation rate edged down by 0.2 percentage point to a 65% participation rate, which is the percentage of either employed persons or persons looking for work. 65% is low compared to historical data.