Friday, November 8, 2013

Oct. Numbers Not Running But Falling


Each month, we take the BLS "economic indicators" report, look at their analysis, look at their published data, and apply it pragmatically to the real world.

When, like last month, the report is delayed for political purposes, we extrapolate from previous reports as well as other available resources, such as state-level bureaus (agencies) that crunch their numbers.

This month's report (on last month's data) was delayed a week, for political reasons. There was a congressional battle over the national credit limit and whether or not to spend within means or to borrow more that taxpayers will not be able to afford to repay. The executive branch decided to "make it painful" for more responsibly-minded politicians and taxpayers by choosing to "shut-down" select bureaus that the executive branch (rather than the US Constitution) deemed "non-essential". Among those things "shut-down" were some of the bean-counters in the Bureau of Labor Statistics.

That delayed last months report on September data and, allegedly, the November report as well.

In reality, the one-week delay for November makes sense, but not due to the "shut-down". It makes sense because the first Friday was also the first of the month. It takes a few days to compile, crunch, and analyze the data. So, the "delayed due to the 'shutdown'" hype is just that, hyperbole.

When the previous report was delayed, we made some predictions. Compare the results from the real data to those predictions.

More than likely, the labor participation rate took another dip. More than likely more people left the workforce. More than likely, full-time employment dropped. The U3 unemployment rate probably took another tick down. That is most likely because employers transferred former full-time positions to part-time and had to hire one new part-timer for every two full time positions transferred. Also, because the number of workers dropped, the percentage of unemployed as a ratio to the workforce would have dropped.
 Well, we were right on the participation rate, but, unfortunately for our citizens, wrong on the U3 number. 

For October, the U3 number rose, despite the largest gain in new hires in months. Unemployment rose to 7.3%. The report claims this is "little changed" though it is an increase.

The political diatribe slipped into the report is also apparent in several phrases in the report. It is painfully obvious the author of the report is playing politics instead of providing unbiased, objective facts based on the numbers. It blames the "shutdown" and furlough of government bureaucrats for the increase in unemployment.

Total employment as measured by the household survey
fell by 735,000 over the month and the employment-population ratio
declined by 0.3 percentage point to 58.3 percent. This employment
decline partly reflected a decline in federal government employment.
Many of those furloughed federal employees were working jobs that were temporary and expired, though not closed. They still are not closed, though, especially in the DoD, many are no longer necessary. With the majority of US Forces in Iraq reduced, uniformed military personnel should return to the duties that DoD civilians and contractors were higher to temporarily fill to free up military personnel to deploy. Still, they were not "unemployed". They were on a 2-week vacation. For most, it was a paid vacation.

U6 unemployment (people who want full-time employment but are stuck working part-time jobs) increased to a reported 12.5%. The "marginally attached" and "discouraged" number also changed. The "marginally attached" dropped slightly as seasonal hires for the holiday retail season brought some back into the fold. "Discouraged workers" rose slightly, but not enough to adjust the percentage by a full 0.1%.

Among the real concerns is the Workforce Participation Rate which fell to 62.8%. Though 204,000 new hires occurred in October, despite the government spin that the "shutdown" would mean a lower number of new hires, the number of citizens who are working or willing to work is lower. It is now at the lowest point since the Carter Administration. The working to non-working rate is just as bad. Currently, 58.3% of the population is working. That figure declined 0.3% in the past month. That means that less than 6 out of 10 people are working. In fact, it's 11 people out of 20 with full-time employment plus one with only part-time.

With such a low WPR, a "recovering" U3 rate should be closer to 5%. If the WPR is declining, the U3 should not be increasing. When that happens, it is bad. If it happens for two or more consecutive months, it's depression conditions.

For comparison to the fifth year of the Bush Administration, when the WPR was 66.2% and the U3 was 4.5%.

If the WPR were the same today as the numbers for October 2006 (Bush's 5th year), the U3 and U6 numbers, today, would be closer to 11.9% (U3) and 16.9%, respectively.