Why Yesterday's Jobs Numbers Don't Signify 'Gaining Steam' or a 'Surge'
The headline New York Times (HT Clay Waters at NewsBusters) after yesterday's job report was: "U.S. Economy Gains Steam as 200,000 Jobs Are Added." At the Associated Press: "Nation adds 200,000 jobs in December hiring surge."
Telling millions of news consumers that it's so doesn't make it so.
For total nonfarm and the private sector, the following graphic shows the raw (i.e., not seasonally adjusted) and seasonally adjusted results for the final three months of the past 11 years:
Overall (red boxes at left), raw results in December 2004 and 2005 which were equivalent to what we saw yesterday led to seasonally adjusted results 68,000 and 42,000 below yesterday's seasonally adjusted result. Yesterday's raw result, if achieved in either of these years, would have led to a seasonally adjusted result of about 140,000 -- 60,000 less than reported.
In the private sector (blue boxes at right), the raw result in December 2005 of 94,000 jobs lost was only 14,000 jobs worse than the -80,000 reported for December 2011, yet yesterday's seasonally adjusted result was 74,000 jobs higher (212K vs. 138K). What's more, the nearly breakeven raw result in December 2006 (only 6,000 jobs lost) led to 37,000 fewer job additions after seasonal adjustment than yesterday (175K vs. 212K).
As I wrote yesterday at my home blog: "... the irregularities of the past 3-1/2 years render normal concepts of seasonality almost useless." That's pretty obvious, based on the analysis just conducted.
In her story, the Times's Shaila Dewan failed to even mention that the reported positive numbers were seasonally adjusted. At the AP, Paul Wiseman and Christopher Rugaber got to it in their 26th of 38 paragraphs, and then only cryptically: "Economists cautioned that some of the month's gains reflected temporary hiring for the holiday season. The government adjusts the figures to try to account for that seasonal factor, but doesn't always get it exactly right." No kidding.
The raw numbers show that the job market, in the context of the high unemployment rate and labor underutilization, is at best sluggishly improving. It is definitely not in a "surge," or "gaining steam."
Cross-posted at BizzyBlog.com.