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Old Lie Returns In New U.S. Jobs Report

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It’s been quite a while since I’ve discussed the statistical farce invented in the U.S., and known as the “birth/death model”; so long in fact that newer readers may not have read anything on this subject previously. So to refresh the memories of older readers and enlighten newer ones I’ll start from the beginning.

Several years ago, one of the statistical charlatans employed by the U.S. government went to the Bureau of Labor Statistics and said exactly what this fraudulent bureaucracy wanted to hear:  (supposedly) the U.S. economy was producing all sorts of new jobs which, despite the U.S.’s army of statisticians, couldn’t be “seen” by any of their job-counters.

Moreover, claimed the statistician, there was a simple statistical “model” (i.e. theory) which could be constructed which would count all of these invisible jobs. This theoretical model had absolutely nothing to do with employment. Instead, all these invisible jobs could be captured through a magical formula – based simply upon the number of people being born and/or dying in the U.S. at any given time.

Understand that the fact that this model had absolutely nothing to do with employment was not not seen as a “weakness” by the compulsive liars of the BLS, but rather a strength. Models based upon actual employment data would have constraints on the degree to which numbers could be exaggerated/fabricated.

Conversely, create a formula which magically invents jobs, but is based on data with no logical/statistical connection to employment and all such constraints disappear. One can lie with impunity, and that is precisely what the BLS has done. The pattern of deceit is identical each year.

The fabrications begin in a big way in January. However (ironically) the birth/death model is not adding phony jobs to the BLS monthly non-farm payrolls report each January. Instead, in a Machiavellian twist the birth/death subtracts 300,000 to 400,000 jobs from the monthly jobs report every January.

Immediately readers will think I am contradicting my own analysis. Not so fast. One would have to be naïve in the extreme to believe that the BLS only falsifies a single piece of data out of the truckload of raw numbers it processes every month. Another tool which the BLS uses/abuses frequently to alter reality are “seasonal adjustments”. Unlike with the birth/death model, there is a valid statistical/theoretical basis for engaging in seasonal adjustments in calculating employment.

However, we know that the BLS also uses seasonal adjustments to lie about jobs for two reasons. First of all these supposedly “seasonal” adjustments have become steadily more biased in producing higher rather than lower numbers for any particular report. The calendar itself has been turned into a “job-creator” in the U.S. economy. Even more obvious is what the BLS does every January.

Because of all the Christmas hiring, the January “seasonal adjustment” is always a positive number – as a response to the expected, scheduled, post-holiday lay-offs. Indeed it is the largest positive number of the entire year. Because of the increased job turn-over at this time of the year, this creates a lot of statistical “white noise” – and the opportunity to exaggerate this seasonal adjustment more than at any other time of the year.

The problem for the BLS: even the Sheep wouldn’t believe the U.S. government if it claimed (every January) that the economy was producing huge (seasonally adjusted) “jobs gains” – as people watched all of the Christmas workers being laid off. Enter the birth/death model.

This provided the liars at the BLS with the opportunity to make use of a great, big “seasonal adjustment” lie for the month of January. However, instead of producing some gigantic (and farcical) “jobs gain” for the month of January – which no one would believe – the BLS subtracts out all of the fabricated seasonal adjustment jobs with a 300,000 to 400,000 subtraction from the birth/death model.

Essentially these are fantasy jobs which the BLS has “put in the bank”, to be used to pad succeeding jobs reports. Of course it uses up that paltry 300,000 to 400,000 fantasy-jobs early each year. In fact, by the end of every year the BLS is forced to engage in a second, annual birth/death ritual: subtracting all of the fantasy jobs which were added above and beyond the 300,000 to 400,000 fantasy jobs banked back in January. Each year that second adjustment generally subtracts at least another 750,000 fantasy jobs, meaning that each and every year this statistical lie is fabricating 1 million jobs or more.

Government apologists will argue that since the fantasy-jobs are (eventually) subtracted out from this farcical model that even if it has absolutely no statistical validity that no harm is being done. That premise is totally false. In fact, the drones both in the media and the general public have had their attention spans reduced to such an absurd extreme that they literally don’t even “notice” these revisions.

The proof of this proposition is the whole birth/death game itself. If anyone in the mainstream media was actually paying attention to the BLS’ revisions then it could never have gotten away with this entirely fraudulent birth/death game of adding 1+ million fantasy-jobs – year after year after year. Readers also need to realize that we also have proof that this is deliberate deceit rather than just bureaucratic ineptitude.

If we were to pretend that the birth/death model was not a deliberate fraud, then the BLS’ statistician would be confronted with a model which produces a gigantic (positive) bias every year. When I say “gigantic”, let me be more specific: frequently the size of this bias (i.e. the size of the lie) exceeds the total, cumulative annual adjustment.

It is impossible for any statistician to pretend they are engaging in legitimate analysis when their “margin of error” is often larger than the calculation itself. This is especially true when all that needs to be done to eliminate this consistent bias is to adjust the parameters of the formula itself. In an absolute worst-case scenario, at least 75% of this bias could be eliminated with even conservative revisions of the parameters.

We are left with the following inevitable chain of logic:

1) The birth/death model has been proven (over a number of years) to have absolutely no statistical validity/legitimacy of any kind. It produces a million (or more) imaginary jobs every year. We know the jobs never existed because the BLS itself subtracts them all out at the end of each year.

2) The gigantic, consistent bias which appears in this calculation every year could be easily and instantly eliminated any time the BLS chose to do so, but the BLS has refused to adjust its calculation to eliminate this consistent bias.

3) The birth/death model is nothing but a clumsy, deliberate deception; which demonstrates (in equal proportions) the inherent dishonesty of the BLS and the gross negligence of the mainstream media in allowing this same charade to take place year after year.

This brings us to the present. Why am I ranting about the birth/death model again? Because the BLS has abruptly and dramatically escalated the number of fantasy-jobs it’s adding to its reports each month via the birth/death model.

Early in the year it was “business as usual” when it came to its birth/death lies: adding close to 100,000 phony jobs in both February and March (following the annual game in January). That put the BLS on pace for roughly 1 million phony birth/death jobs for the year. Then the bottom fell out of the U.S. economy.

First in April, and then again in May the BLS has added more than 200,000 birth/death fantasy-jobs each month. Suddenly the BLS is on a pace to add more than 2 million phony birth/death jobs in 2012. Even more alarming is when we take a look at the official, overall numbers being peddled by the BLS.

The BLS originally announced that the U.S. economy had supposedly added 115,000 in April. Take away the 206,000 imaginary birth/death jobs and that would already mean a loss of 91,000 jobs for the month. However, when May’s report was just announced last Friday, the BLS revised April’s number lower (surprise, surprise) by more than 1/3 – nearly 40,000 jobs were slashed from the initial bogus report. Suddenly, April’s number becomes a net -127,000 jobs, with one more (negative) revision still to come.

This brings us to May. By now, everyone has heard the “surprising” bad news: the BLS announced ‘only’ 69,000 net “new jobs” for the month. However, what the BLS hid from the Sheep was that it added 204,000 more fantasy birth/death jobs. Instantly that jobs-gain of 69,000 becomes a jobs loss of 135,000 – before the BLS has engaged in its two monthly “revisions”, where 10’s of thousands more fantasy-jobs will be erased.

With one more revision to come for April, and two ahead for May, what we see is already bad enough. In just April and May we already see more than ¼ million lost jobs in the U.S. economy. Understand that this is still just the tip of the iceberg when it comes to BLS deceit. I’ve already mentioned that it also uses “seasonal adjustments” as another means of inventing vast numbers of fantasy-jobs each year. But just as the U.S. government uses a vast array of “adjustments” to falsify its inflation numbers, it does the same with employment.

How many jobs has the U.S. economy really lost in April and May? When did the job-losses really begin? Was the U.S. economy ever producing positive jobs-growth during this mythical “recovery”? No one but a handful of strategically-placed members of the U.S. government (and the omnipresent Wall Street “insiders”) know the real answer to those questions.

Many continue to scoff at my unflinching dismissal of the “U.S. economic recovery” as nothing but a propaganda myth. The numbers strongly support my position. Ask the BLS itself where most of the U.S. jobs-growth has come from during this supposed recovery, and without hesitation the BLS will point to the “robust U.S. manufacturing sector” – where it claims most of these fantasy-jobs have originated.

Here’s the problem: since the start of the U.S. “recovery”, U.S. energy consumption and even electricity consumption has collapsed. So great has this collapse in energy consumption been that the Wall Street Journal recently trumpeted the news that the United States – the world’s great energy glutton of the past century – was now a “net energy exporter”.


Here’s a question for the large, naïve flock within the mainstream media and the general public who have swallowed the myth of a U.S. recovery: what sort of “manufacturing” uses zero energy or electricity of any kind? Indeed, with the total collapse in U.S. energy consumption this “new manufacturing” would have to use less-than-zero energy – i.e. somehow adding reserve energy to the U.S. economy.

Note that the U.S. didn’t become a “net energy exporter” during the original, official “recession”. No. This collapse in U.S. energy consumption (and electricity consumption) has occurred during this farcical “recovery”. More recently, terrible back-to-back U.S. “durable goods” reports suggests the U.S. manufacturing sector is now in free-fall.

The BLS also tells us there has been substantial gains in retail sector employment, where U.S. mall-vacancy rates remain near all-time highs. Just like the U.S. supposedly has a thriving manufacturing sector using no power, we’re told the U.S. has a retail sector which is “growing” without stores.

What about on-line retailing, shriek the apologists? Yes, the growing volume of on-line retailing – which uses no more than 1/3 the amount of labour of a normal retail outlet. Downsizing the retail sector from real store-fronts to the virtual world of the internet obviously cannot “add jobs” on a net basis – especially with U.S. retailers selling less and less goods each month.

Strip away “inflation” (real inflation, as calculated by John Williams at Shadowstats.com) from the unadjusted “retail sales” numbers each month and we are left with negative numbers – less and less goods being sold from less and less stores…and yet supposedly there is “jobs growth” here.

It’s not simply a matter of the BLS engaging in “dubious” adjustments in order to produce “implausible” monthly jobs reports – month after month after month. What we have seen consistently, over a period of many years is the BLS engaging in blatantly fraudulent falsifications as it produces utterly absurd monthly numbers, with not the slightest connection to the real world.

The only thing more perverse than the actual numbers of the BLS is the reaction to those numbers. The U.S. monthly non-farm payrolls report is the most grossly-fabricated number in the entire world of statistics. At the same time, the equally fraudulent (corporate) media tells the Sheep it is the “most important” number on which they should fixate, and it influences not only U.S. markets but global markets more than any other single economic report.

That’s the way a propaganda machine operates.

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Comments (8)Add Comment
Jeff Nielson
...
written by Jeff Nielson, June 07, 2012
Boardwalk, I remain ENTIRELY unconvinced.

1) The BLS is a CONFIRMED liar: it ADDS 1+ million fantasy-jobs to its reports each year (trumpeting all the "new jobs") and then QUIETLY subtracts all those jobs - and often more - at the end of the year.

2) The "business" data you keep yammering about is STRONGLY CORRELATED (naturally) to the real jobs data. The BLS says this themselves in the quote you conveniently provided. So the ENTIRE "deviation from the mean", the entire "birth/death adjustment" is derived from the NON-correlated, NON-relevant birth/death data. There can be no argument here.

3) The BLS can dress up its lies any way that it wants and this WINDOW-DRESSING will not fool anyone with an understanding of statistical techniques, who engages in any kind of scrutiny of this farce.
Boardwalk
...
written by Boardwalk, June 07, 2012
Let me expand your BLS quote to give it context and improve its accuracy. (Emphasis added is mine)

"Earlier research indicated that while both the business birth and death portions of total employment are generally significant, the net contribution is relatively small and stable. To account for this net birth/death portion of total employment, BLS uses an estimation procedure with two components: the first component excludes employment losses from business deaths from sample-based estimation in order to offset the missing employment gains from business births. This is incorporated into the sample-based estimate procedure by simply not reflecting sample units going out of business, but imputing to them the same trend as the other firms in the sample. This step accounts for most of the net birth/death employment."

"The second component is an ARIMA time series model designed to estimate the residual net birth/death employment not accounted for by the imputation. The historical time series used to create and test the ARIMA model was derived from the UI universe micro level database, and reflects the actual residual net of births and deaths over the past five years."

UI = Unemployment Insurance not population census

This ARIMA model is the weak link of the birth/death model as it looks back 5 years. When the economy takes a turn, the ARIMA model will be off (sometimes way off) for up to 5 years as it is basically a straight line extrapolation of the trend that was in place when the economy was still humming along.

http://www.bls.gov/web/empsit/cesbd.htm
Jeff Nielson
...
written by Jeff Nielson, June 07, 2012
I gotta chime in here. I'm no BLS apologist, however their birth/death model is not based on the births and death of people, but rather of businesses. A very important distinction, especially in the context of yor essay.

http://www.bls.gov/web/empsit/cesbd.htm


Boardwalk, you are only partially correct - as I tried to explain when I replied to MrPaladin.

Let me quote from the BLS first:

"...BLS uses an estimation procedure with two components...The second component...reflects the actual residual net of births and deaths over the past five years."

As you can see, the SECOND component is LITERALLY the number of people being born and dying.

Now here is the point I was trying to make yesterday: the employment data they talk about is NOT "a model". It is an EXTRAPOLATION. Just because they MENTION the business component FIRST does not mean it's dominant.

Look at it this way: if YOU had created a TOTALLY ridiculous/fictional model, wouldn't you try to HIDE that fact by "including" some legitimate data? All of the "modeling" done in this calculation is based on people being born and dying - thus my analysis is correct
Boardwalk
...
written by Boardwalk, June 07, 2012
Jeff,

I gotta chime in here. I'm no BLS apologist, however their birth/death model is not based on the births and death of people, but rather of businesses. A very important distinction, especially in the context of yor essay.

http://www.bls.gov/web/empsit/cesbd.htm
Jeff Nielson
...
written by Jeff Nielson, June 05, 2012
USGovt claims it is using a sample which "includes about 141,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 486,000 individual worksites."

Although I have little doubt that this model is flawed, are you flatly stating that the above is a lie?


MrPaladin, I question the entire model. First of all, we KNOW the model is a fraud since all the jobs are subtracted out at the end of the year.

Secondly I'm questioning the entire premise of "invisible jobs" (and businesses). Are these "invisible" jobs merely under-the-table? Or are we talking about "jobs" such as working for the Mafia, or local drug gangs? Perhaps they're referring to teenage babysitters?

Again, if they already had the data to measure this then they wouldn't need a "model" at all. And the simple extrapolation you describe is NOT a model. Governments do extrapolations in many if not most of their calcuations - so it CANNOT be as you describe it.

The unemployment rate itself is an extrapolation, but you never hear anyone refer to it as a "model". Rather they talk about different DEFINITIONS of unemployment when they choose to add or subtract various groups of workers, but this has nothing to do with economic modeling.

An economic "model" invariably requires the use of some sort of PROXY. What data ARE they using as their "proxy", since the "sampling of businesses" you describe is NOT a proxy, it's a mere extrapolation?

The fact that the BLS is engaging in obvious double-talk here is obviously INTENDED to distract people from the fact that the jobs DON'T EXIST.
MrPaladin
...
written by MrPaladin, June 05, 2012
USGovt claims it is using a sample which "includes about 141,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 486,000 individual worksites."

Although I have little doubt that this model is flawed, are you flatly stating that the above is a lie?

Jeff Nielson
...
written by Jeff Nielson, June 05, 2012
I thought the birth/death model was based on the number of jobs supposedly provided from newly started businesses (births) and business closings (deaths) during a month (not the number of people being born and/or dying in the U.S. at any given time).


MrPaladin, you are correct in that this is what the BLS claims to be measuring. However, here's the catch. If they actually had the data on the number of businesses being created and destroyed then they wouldn't NEED a "model", they would simply COUNT the jobs directly.

They DON'T have such data. So what is CLAIMED by these statistical charlatans is that the number of businesses being created/destroyed is PROPORTIONAL to the number of people being born/dying at that time. This in itself is an EXTREMELY dubious proposition since it assumes such behavior is constant - irrespective of economic conditions.

However, what is obviously BOGUS (i.e. deliberatly deceitful) is that the birth/death model is producing 1+ million fantasy-jobs each year. Where is the BABY BOOM necessary to provide the data for all those fantasy-jobs?

In other words, not only is the model inherently defective, but it is being DELIBERATELY rigged to invent fantasy-jobs, month after month, year after year.

It is a disgraceful farce. And the media drones are an even BIGGER disgrace for allowing this to continue.
MrPaladin
...
written by MrPaladin, June 05, 2012
I thought the birth/death model was based on the number of jobs supposedly provided from newly started businesses (births) and business closings (deaths) during a month (not the number of people being born and/or dying in the U.S. at any given time)....

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