Reply #4: Like The Bogus Jobs Snow Has Already Created? [View All]

65% of The 1.4 Million New Jobs Were Created By A BLS Computer

No one knows if they exist or not!

Look at www.bls.gov - Birth/Death model.

Mr, Bush and Rove are touting Bush**** once again.

Also see the reports from www.comstockfunds.com

Labor Picture Still Anemic

http://www.comstockfunds.com/index.cfm/CFID/1452339/CFTOKEN/13076384/MenuItemID/29.htm

We have long contended that the economic recovery and the consumer spending that propelled it were artificially based on the massive stimulation that enabled consumers to convert the wealth effect of soaring home prices and major tax cuts into ready cash despite the absence of adequate employment and wage gains. The latest data continues to support the view that employment and wage growth have been unusually tepid in the current cycle. Here are some very simple facts culled from the historical data.

On average, over the past six economic expansions, it took 24 months for total non-farm payroll employment to reach its previous peak, with a range of 19-to-32 months. Now, with the reporting of the May 2004 number, we are 38 months beyond the prior peak, and employment is still 1.37 million under its prior high. At this pace it would take another five months of average 275,000 increases just to reach the previous peak. Given these figures it is no wonder that the Fed has been so reluctant to raise rates and eliminate the only factor holding up a fragile economy.

The lack of employment growth is real and is reflected in the lack of wage gains. In the first 29 months of the last five economic recoveries the rise in wage and salary disbursements accounted, on average, for 67 percent of the gain in consumer disposable income (DPI), with a range of 59-to-79 percent. In the current expansion the increase in wages and salaries has accounted for only 33 percent of the growth in DPI. This means that an unusual two-thirds of the gain in DPI was made up of items other than wages and salaries—and the massive amounts of cash-outs from mortgage refinancing are not even part of the DPI.

Snip ......

Phantom Jobs?

http://www.comstockfunds.com/index.cfm/act/newsletter.cfm/category/market%20commentary/menuitemid/29/MenuGroup/Home/NewsLetterID/1106/startrow/3.htm

According to the headlines and the releases by the Bureau of Labor Statistics (BLS), payroll employment increased by a total of 947,000 in the last three months—353,000 in March, 346,000 in April and 248,000 in May. Since it is well known that this figure is based on an actual survey of a large number of establishments one might presume that the result is based on actual head counts. It turns out, however, that this is not the case. In fact, a large majority of the employment growth that was reported and so widely hailed in the last three months is based on a guess attributable to an arcane formula used by the BLS to estimate employment changes resulting from the birth and death of business establishments.

Snip ......

According to the BLS, “The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend…it is likely to remain as the most problematic part of the estimation process.”

The problem is that for the three months ending in May the estimation model contributed a total of 618,000 of the 947,000 rise in payroll employment—153,000 in March, 270,000 in April and 195,000 in May. Thus for the three months, 65 percent of the total growth in employment is an estimate based on the formula, and only 35 percent were actually counted. Now this may be a completely valid procedure that reflects the real number of jobs added. But it also can be way off base and result in the creation of phantom jobs that don’t exist. Nobody knows, including the BLS. The agency itself states that the model would have some difficulty at turning points, and this period would seem to fall into that category.

Snip ......