The Dismal Science of Economics and Statistics: “Headline Numbers” Lie

Amazingly, the US Department of labor reported only 524,000 jobs were lost in December. The market was almost overjoyed, as they had expected a number in the range of 650,000 to 750,000. The 524,000 did not include the “revision” to the prior months numbers downward by 154,000. Thus, adding the 154k to the 524k, one may come to a sum of 678,000, right in line with the nightmare expectations.

There is also further distortion due to a “birth-death” quotient applied by the Department of Labor, but we will not get into that here, except to say that it is currently making the reported numbers look better than they really are, rather than worse.

Other very weak numbers not reported in the headlines include:

Average workweek has declined to 33.3 hours among all employed workers in December. This is the lowest number of hours worked since Uncle Sam started watching these numbers in 1964. (Some economists anticipate that this number will correlate to another 500,000 job losses in the coming months.)

Since January 1, nine calendar days ago and 6 business days ago, major employers (those with 5,000 plus employees each) have announced job cuts of more than 30,000. On a daily basis this is an average run rate of 5,000 per day, or annualized rate of additional 1.1 million of job cuts!

Some may say that the run rate of 1.1 million is less than half of the newly unemployed of 2.5 million fellow Americans in the US during 2008, but there are numerous other facets as well.

Keep in mind, when an unemployed worker takes a job at because they must at 30%, 50% or 75% of their former compensation, they are no longer statistically unemployed.

Key numbers to continue to watch includes average compensation per hour, average numbers of hours worked, and the U6 unemployment numbers which reflect a much broader and economically relevant calculation of the unemployment levels.

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  1. andeeroo

    Will Congress bailout plastic surgeons next?

    Examine the wrinkles in the shrinking cosmetic surgery biz!


  2. It is amazing how widespread the “Red Plague” we face is.

    Professionally, I advise a dental implant company. Much of their implants are for cosmetic purposes, in addition to improving dental health. They have seen a significant slowdown in the elective use of their products over the past four months.

    Another client invested in a $25,000 smile last November, using a “zero interest” loan, similar to those offered by the cosmetic surgeons. She called me to figure out a way to may down the loan. Had she not done the procedure last year, she certainly would not have done it this year!

    Thanks for reading and commenting. Please add a link to my blog, to increase the “Technorati Authority”! Thanks.

  3. Informative post, thanks..

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