How The Government Fudges The Employment Report

Last Friday the Labor Department reported that 345,000 jobs were lost in May better than the 520,000 than economists were expecting. On the other hand the unemployment rate jumped to 9.4% a larger than expected rise, so what gives? How can the job picture seem to be improving on one hand but worsening on the other? Very simple, the Labor Department fudged the payroll report as usual. The government adds jobs (or rarely takes away) to the report based on whats called the Birth/Death model. What's the birth/death model you may ask? It is an estimate by the labor department of jobs being created by the formation of new, small businesses.

In May the labor department states that 220,000 new jobs were created by new businesses, the highest number ever! This in the middle of the worst recession in years, yea right. It is more likely that more businesses closed their doors in May than opened so this number is a total fabrication to make the number look good and instill confidence in investors that the economy is turning. Do you really believe more jobs were created this May than last when we were not in the middle of a nasty recession?

Let's look deeper into the birth/death numbers.

Construction firms added 43,000 new jobs in May even though new home construction is at multi decade lows. Leisure and Hospitality (Hotels and Casinos) added a whopping 77,000 jobs even though travel (business and personal) are down and dropping fast. There were even 7,000 jobs added to the financial services industry. Tell that to my many friends serching for a job in finance.

You get the picture, these numbers are simply fabricated to make the number look better. What is remarketable to me is that investors and the financial media believe it! I for one pay little attention to government released data, it is all B.S.-Lou