Seasonal And Birth Death Adjustments Add 429,000 Statistical "Jobs"

Zero Hedge ^ | August 3, 2012 | Tyler Durden

[Zakeet]

Happy by the headline establishment survey print of 133,245 which says that the US "added" 163,000 jobs in July from 133,082 last month? Consider this: the number was based on a non seasonally adjusted July number of 132,868. This was a 1.248 million drop from the June print. So how did the smoothing work out to make a real plunge into an "adjusted" rise? Simple: the BLS "added" 377K jobs for seasonal purposes. This was the largest seasonal addition in the past decade for a July NFP print in the past decade, possibly ever, as the first chart below shows. But wait, there's more: the Birth Death adjustment, which adds to the NSA Print to get to the final number, was +52k. How does this compare to July 2011? It is about 1000% higher: the last B/D adjustment was a tiny +5K! In other words, of the 163,000 jobs "added", 429,000 was based on purely statistical fudging. Doesn't matter - the flashing red headline is good enough for the algos.

Seasonal Adjustment:

Birth Death:

[Zakeet]

Can I help it if the bureaucrats at the Department of Labor commit a little fraud in order to try to get me reelected ... and my fawning lapdogs in the main stream media lap this swill up like it was nectar and then repeat it like parrots ... and stooges with public school educations believe everything they hear from the government and the MSM?

[txrefugee]

Be sure to clue in the “experts” at Fox Business and Bloomberg about this naked twisting of the numbers. Don’t bother letting CNBC know. They are getting drunk at a bar somewhere, celebrating Obama’s good news numbers.

Ask any of the unemployed you have in your family if they’ve seen any change in this pitiful job market. The answer is a resounding, “NO!”

[Red Badger]

They are creating virtual jobs out of thin air. This will blow up in their face big time during the debates...........

[Pearls Before Swine]

I beat ya to the post—but I put it under Bloggers, since I consider ZeroHedge to be one.

[Gadsden1st]

I would love to play poker with this clown!

[StAnDeliver]

"They are creating virtual jobs out of thin air. This will blow up in their face big time during the debates..."

YES. I've said this before, the best thing Mittens could do is switch to U6 when talking about unemployment, and promise to use U6 as the official rate.

15%

[Zakeet]

A couple of things in the article could use a little clarification:

• The Birth Death adjustment is a gimmick whereby the DoL assumes one job was created for every new unemployment insurance claim filed due to a business failure. The reason given: it takes time for hiring by brand new companies to file papers reflecting brand new jobs, so they assume that for every firm that goes broke, a new one takes its place. None of the economists that I respect think this is a valid premise during times of severe economic downturn.

• The term Algos refers to computer algorithms that read and analyze headlines and then trigger high frequency trades.