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Title: The Real Story Behind Our Unemployment Numbers
Source:
FNC
URL Source: http://www.foxnews.com/opinion/2010 ... -bureau-labor-statistics-grim/
Published: Feb 5, 2010
Author: John Lott
Post Date: 2010-02-05 12:39:45 by Badeye
Keywords: None
Views: 1529
Comments: 13
The Real Story Behind Our Unemployment Numbers By John Lott - FOXNews.com
A slight improvement in the jobless rate but what is the government hiding about the picture for most of 2009?
print email share recommend (1) Most people seem to believe that the number of Americans with jobs is a clearly identifiable number. All you do is count up the number of people with jobs. Unfortunately, that isn't the way it works. The number reported each month is based on surveys, and surveys have can often have problems. As it turns out, the surveys estimating the number of people with jobs reported over the last couple of years suffered from some really big problems. The economy actually lost about 824,000 more jobs during the recession than we previously thought.
But those adjustments have so far only been made through March 2009, and there are strong reasons to believe that the survey data since then also needs to be adjusted downward.
There are two ways economists measure the number of jobs, the establishment survey that asks about 370,000 employers how many people they are employing and the household survey that asks about 110,000 people each month whether they are working. The establishment survey is often given more weight because about 40 million Americans work for the companies surveyed, a lot more than the 110,000 people interviewed in the other survey. But 110,000 people still make up a huge sample (remember that a big survey for a presidential election might involve 2,000 people), and it is hard to ignore its results. The household survey is also what is used to calculate the unemployment rate.
The problem is that the two surveys have reached different estimates, with the household survey showing a significantly greater drop in the number of jobs than the establishment survey. And it turns out that there might be a simple reason for that. For the survey of firms, the list of firms surveyed doesn't change very often. Thus the Bureau of Labor Statistics, which puts these numbers together, can only guess at the number of jobs created by new firms since they don't even know how many new firms have been created each month. To get around this gap in the data, the Bureau makes an assumption that the jobs created at new companies is about equal to the jobs lost at companies that go out of business.
Unfortunately, that assumption hasn't worked during the current recession. Firms have been going out of business and news ones haven't sprung up to take their place. Keith Hall, Commissioner of the Bureau of Labor Statistics, said that most of the revisions made up until March 2009 were made because the number of business closing hasn't been matched by jobs create by new businesses.
These recent errors are quite large. The error in estimating the number of jobs from April 2008 to March 2009 was 10 times greater than the average error over the preceding eight years. What does this mean in terms of jobs? Normally the government would underestimate the number of new jobs by 80,000 and this time it was overestimating them by about 800,000.
So what is the error rate from April to December 2009? We won't have a good idea until the numbers are revised again in February 2011. In the meantime, we should look at the establishment survey numbers with a great deal of skepticism. For example, the Bureau of Labor Statistics assumes that new firms generated almost a million new jobs over those nine months. As it turns out, the household survey just happens to show that about a million more jobs were lost than the survey of firms indicates.
Given these problems, what should people look for to understand what is happening to the economy? The most accurate measure of how well things are going is the unemployment rate and the numbers showing how many people have been so discouraged while looking for a new job that they have left the labor force altogether. With today's numbers showing that the unemployment rate is now at 9.7 percent and that 200,000 fewer Americans have stopped looking for work, the recent picture has finally improved slightly.
John R. Lott, Jr. is a FOXNews.com contributor. He is an economist and author of "Freedomnomics."
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The non-seasonally adjusted unemployment rate is 10.6%
#2. To: dont eat that (#1)
I'd say thats about right. The 'real' unemployment rate is around 17%.
Just heard Nancy Pelosi' describing the unemployment rate and job losses as 'the worst since Herbert Hoover'...
Course its from 2003...Owe-Bama's record to date makes that look ridiculous, yet Nancypants has nothing to say about it TODAY.
Its getting uglier out there...
#3. To: Badeye (#2)
The 'real' unemployment rate is around 17%.
The U-6, before the BLS started tinkering with it, is actually 18%.
#4. To: Badeye (#0)
Being a Republican means you get to choose your own reality.
#5. To: Badeye (#2)
Course its from 2003...Owe-Bama's record to date makes that look ridiculous, yet Nancypants has nothing to say about it TODAY.
And somehow if we cut spending then we'll get job growth, right?
Being a Republican means you get to choose your own reality.
#6. To: go65 (#5)
And somehow if we cut spending then we'll get job growth, right?
We cut spending because we're writing BAD CHECKS.
We cut taxes to acheive JOB GROWTH.
And we've lost 3.3 million jobs since the day Owe-Bama signed the faux 'stimulus package' into law, GO65.
Its getting uglier out there...
#7. To: Badeye (#6)
We cut spending because we're writing BAD CHECKS.We cut taxes to acheive JOB GROWTH.
So let me see if I've got you right, if Obama proposes say a $1.5 trillion spending cut we'll have job growth?
You seriously expect us to believe this?
Being a Republican means you get to choose your own reality.
#8. To: go65 (#7)
We cut spending because we're writing BAD CHECKS. We cut taxes to acheive JOB GROWTH.
Reread slowly is my best advice.
Its getting uglier out there...
#9. To: Badeye (#8)
Reread slowly is my best advice.
and if you cut taxes, you raise the deficit even further.
So either you are arguing for a higher deficit, or spending cuts.
Which is it?
Being a Republican means you get to choose your own reality.
#10. To: go65 (#9)
Cutting taxes has NEVER resulted in 'less Federal Revenue'.
Reread slowly til it sinks in.
Its getting uglier out there...
#11. To: Badeye (#10)
Cutting taxes has NEVER resulted in 'less Federal Revenue'.
Taxes were cut in 1981...1982 receipts were lower in 1982 than in 1981. Taxes were cut in 2001...revenues in 2002 and 2003 were lower than they were in 2001.
...McCain's chances of gaining the [2008] GOP nomination died in South Carolina in 2000, and simply won't ever recover.
Badeye posted on 2007-04-04 12:55:23 ET Reply Trace
#12. To: Badeye (#10)
Cutting taxes has NEVER resulted in 'less Federal Revenue'.
Now that's spin.
Here's the reality:
In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding.
“Federal revenue is lower today than it would have been without the tax cuts,” Alan D. Viard of the conservative American Enterprise Institute told the Washington Post last October. Viard, who worked in the Treasury Department’s Office of Tax Analysis and the White House’s Council of Economic Advisers under President Bush
the Congressional Budget Office’s 2007 Budget Outlook: “The expiration of tax provisions as scheduled has a substantial impact on CBO’s projections, especially beyond 2010 when a number of revenue-reducing tax provisions enacted in the past several years are slated to expire,” the report says. “Almost all of the expiring provisions reduce revenues.”
The Joint Committee on Taxation estimated that the 2001 tax legislation (the Economic Growth and Tax Relief Reconciliation Act) would cause government revenues to be 107.7 billion less than they would have been in the absence of the legislation in 2004, 107.4 billion less in 2005 and 135.2 billion less in 2006. The committee's estimates for the effect of the Jobs and Growth Tax Relief Reconciliation Act of 2003 were that it would reduce otherwise projected revenues by 148.7 billion in 2004, 82.2 billion in 2005 and 20.7 billion in 2006. The JCT makes its comparisons against the Congressional Budget Office's receipts baselines.
Also, Rob Portman, director of the Office of Management and Budget, and Ed Lazear, chairman of the Council of Economic Advisers, told journalists at the Washington Times last October that the tax cuts prompted economic and stock market growth. But, the paper reported, “they conceded that the tax cuts…cut deeply into government revenue.”
Being a Republican means you get to choose your own reality.
#13. To: go65 (#12)
Parsing, out of context quotes fall short. Way short.
Kinda like Owe-Bama's budget.
Its getting uglier out there...
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