On Friday, the government's Bureau of Labor Statistics reported that the economy created 175,000 seasonally adjusted jobs in February, with 162,000 of the additions occurring in the private sector.
That result exceeded expectations of roughly 150,000, and caused the business press to sing odes of high praise to an economy that was amazingly overcoming this year's difficult winter weather. Unfortunately, as readers will see after the jump, February's raw results demonstrate that it was all an illusion.
The Associated Press, Bloomberg and Reuters all focused on the supposedly positive news of increased consumption reported in today's "Personal Income and Outlays" release from the government's Bureau of Economic Analysis. In the process, two of the three ignored a particulary dreadful statistic about disposable income, while the third (Bloomberg) misinterpreted its meaning.
The dire statistic is the year-over-year comparison of monthly disposable income, which took a deep dive in December, turning in the worst year-over year performance as seen here, in 40 years:
You would think that economic forecasters, who have been obsessing over the impact on economic growth of October's 17 percent partial government shutdown might have noticed that a lot of people have all of a sudden learned that they're about to experience a major cut in their take-home pay. You would be wrong.
Hundreds of thousands of Americans had received health insurance cancellation notices by September 30, and had also learned that they will be on the hook starting next year for hundreds of dollars in premium increases on the Obamacare exchanges. It should be obvious that most affected people would have started spending less on other items virtually immediately, and that they will continue to be in major cutback mode indefinitely. But I didn't find anyone in the establishment press who mentioned it. Nor did I find anyone who noted that the millions of Americans facing higher health insurance premiums are also going to materially impact fourth quarter growth and Christmas shopping season results.
None of the three major wire services covering today's report from the Department of Labor on initial unemployment claims is reporting the major news: For the first time in a long while, actual claims filed during the most recent week ended January 12 were almost 6 percent higher than the number filed during last year's comparable week, an indication that the current employment market may be worse than it was a year ago. Instead, all three are headlining how today's questionably created seasonally adjusted claims number is the lowest in five years.
Both weeks had five business days. Both weeks represented the first such week in the new year. So how did higher raw claims result in the lowest seasonally adjusted claims number in five years, a number which is 8 percent lower than last year's comparable week? The answer, as will be seen after the jump, is that the seasonal adjustment factor used this year is sharply higher than the one used last year.
The Associated Press, Bloomberg and Reuters all eagerly told readers today that the seasonally adjusted annualized level of single-family home sales in September of 389,000 was the highest in 2-1/2 years and really, really good news for the housing market, the economy as a whole, or both. What they all "somehow" failed to mention was the fact that sales are still far below where they were during the 12-month recession in 2008 and 2009 (defining "recession" properly), when the market was screeching to a halt after overbuilding driven by subprime lending frauds by design Fannie Mae and Freddie Mac.
The numbers reported by the Census Bureau since January of 2008, first expressed at seasonally adjusted annual rates, then as raw number of homes sold, follow the jump.
The wire services and other establishment press members appear to be getting more selective in what they will allow into their headlines, particularly omitting items which might hurt Dear Leader.
Take the coverage of yesterday's Employment Situation Summary from the government's Bureau of Labor Statistics. The news was a combination of bad and mediocre (though expectations-beating): The seasonally adjusted unemployment rate increased from 8.2% to 8.3% (or from 8.217% to 8.254%, if you're Obama administration hack Alan Krueger), while the seasonally adjusted number of jobs added was 163,000. Both results are really unacceptable when there's so much not utilized and underutilized labor. Three establishment press headlines avoided mentioning the rate increase, even though it was a major element of the underlying story:
The exercise of watching the press report on the current week's unemployment claims figure as if it's etched in stone and assessing it as if it's the last word -- only to see the figure get upwardly revised the next week virtually without media comment -- is getting extraordinarily tedious and predictable (but of course watching what they do remains necessary).
At the Associated Press, Bloomberg, and Reuters, this week's version of the shell game has a relatively unique twist. The three wire services respectively and all without qualification say that today's seasonally adjusted figure of 351,000 from the Department of Labor "matches a four-year low," "the lowest level in four years," and "back to a four-year low." As seen in the graphic which follows, based on the history of the past year, there's a 98% chance they will be wrong after subsequent revisions, almost all of which have occurred during the very next reported week:
At the Associated Press late Sunday afternoon, reporter Paul Wiseman, who may have the most inappropriate last name in the history of business journalism, engaged in a brazen "It's really not that bad" excuse-making exercise on behalf of the economy Barack Obama, Nancy Pelosi, Harry Reid, and Ben Bernanke have created. In the process, he joined a Reuters reporter in questioning the validity of the information Friday's Employment Situation Report.
The unemployment rate jumped to a seasonally adjusted 9.8% in November and only 39,000 seasonally adjusted jobs were added during the month, according to the Employment Situation Report released yesterday by Uncle Sam's Bureau of Labor Statistics.
Although she at least recognized the report's negativity, Lucia Mutikani at Reuters seemed bent on downplaying its impact, even finding an "expert" who characterized the BLS's work as an "outlier" in her Friday evening write-up. Nobody's claiming the folks at BLS are perfect, but I cannot recall a time when an establishment press wire service reporter has questioned the Employment Situation Report's underlying validity. Despite its supposed lack of credibility, Ms. Mutikani still used the information provided as an excuse to insert a point about how it should cause Fed chief Ben Bernanke to continue the "money from nothing" enterprise euphemistically referred to as "quantitative easing."
Of special note was Ms. Mutikani's bizarre contention that the seasonal adjustment calculations might be flawed. Unfortunately for her, comparisons of actual results on the ground (i.e., the not seasonally adjusted numbers) to the seasonally adjusted numbers that resulted were consistent with November 2004, the last comparable year. This has not always been the case in the volatile economy of the past 2-1/2 years.