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Richmans' Trade and Taxes Blog
Are the Media Massaging the Unemployment Data?
On Thursday, July 7, 2011, the media reported that the U.S. Department of Labor announced a decrease in unemployment insurance claims to 418,000 during the week ending July 2 from the week before ending June 25, 2011. It was hailed as good news and the Dow gained 93points to close at 12,719. The fact is that the data cited was not the actual number but “seasonally adjusted” numbers. When you examine the unadjusted data as reported by the Bureau of Labor Statistics, my one-time employer when I was working on my Ph.D.in economics at the University of Chicago, you find that the actual number of claims actually increased during the last three reporting periods, not decreased. The actual number of new claims filed was 394,286 during the week ending June 18, 406,633 in the week ending June 25, and 416,798 during the week ending July 2. In other words, actual, not “adjusted” unemployment insurance claims were increasing not decreasing. The media reported a decrease in claims and not a single one on TV, radio and the press reported the actual figures which were included in the BLS report. The BLS chose to headline the “adjusted” figures.
Does the public have the right to know? A spokesman for the While House said he belives that the average voter worries only about his own job and therefore unemployment statistics will not affect his vote. It certainly is true that he won’t worry if only a cleaned-up version is publicized in the media. In the local Pittsburgh newspapers, one version based on an Associated Press story was that employment claims “fell by 14,000 to 418,000 in the week ended July 2, the lowest level since mid-May” . The other quoted from a Market Watch story that cited an Automated Data Processing report that the private-sector jobs gained 157,000 in June. The story continues, “Separate data showed that new claims for unemployment benefits fell by more than expected for the week ended July 2.”
The rosy reports somehow are not consistent with the employment data reported by the BLS July 8. “Nonfarm payroll employment was essentially unchanged in June (+18,000), and the unemployment rate was little changed at 9.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major private-sector industries changed little over the month.” Who would you believe?
And, “The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in June at 8.6 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” And the data does not include the 2.7 millions who have stopped looking for work.
We showed on this site several times what measures we could undertake to regain full employment: 1) balance our trade with other nations by imposing single-country scaled tariffs whose rates rise and fall as the trade imbalance increases or decreases, 2) allow drilling for oil and gas on public lands and off-shore. The President still has not lifted the ban on drilling in the Gulf of Mexico!. The government already allows wind and solar plants to be built on public lands, the government pays 30 percent of their capital costs, and guarantees their loans!, 3) eliminate the corporate income tax and treat corporate income as partnership income, or substitute a value-added tax, 4. Get rid of the anti-free market regulations that are so inhospitable to private enterprises. 5) when admitting additional governments to our free trade area, ensure that all the formal and informal barriers to the importation of U.S. products are ended.
Comment by complit, 7/10/2011:
How much of the "new jobs" are merely estimates? I see large drops in the new jobs for the prior two months as adjusted in the June report.
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