John Williams (shadowstats.com) on the December payroll jobs report and unemployment rate

John Williams (shadowstats.com) on the December payroll jobs report and unemployment rate:

As increasingly has become the common circumstance, the upside revisions in headline monthly numbers simply are constructs of highly unstable, inconsistent and questionable seasonal adjustments being shifted between months.  The unadjusted data do not revise, but the adjusted data pick up bogus growth from gimmicked reporting . . .

Counting All Discouraged Workers, December 2014 Unemployment Was 23.0%. . . . More than anything else, though, what removes headline-unemployment reporting from broad underlying economic reality and common experience simply is definitional.  To be counted among the headline unemployed (U.3), an individual has to have looked for work actively within the four weeks prior to the unemployment survey.  If the active search for work was in the last year, but not in the last four weeks, the individual is considered a “discouraged worker” by the BLS [and not counted in the U.3 measure].  ShadowStats defines that group as “short-term discouraged workers,” as opposed to those who become “long-term discouraged workers” after one year.

Moving on top of U.3, the broader U.6 unemployment measure includes only the short-term discouraged workers.  The still-broader ShadowStats-Alternate Unemployment Measure includes an estimate of all discouraged workers, including those discouraged for one year or more, as the BLS used to measure the series pre-1994, and as Statistics Canada still does. 

When the headline unemployed [U.3 measure] become “discouraged,” they are rolled over from U.3 to U.6.  As the short-term discouraged workers roll over into long-term discouraged status, they move into the ShadowStats measure, where they remain.  Aside from attrition, they are not defined out of existence for political convenience, hence the longer-term divergence between the various unemployment rates.  Further detail is discussed in the Reporting Detail section.  The resulting difference here is between a headline December 2014 unemployment rates of 5.6% (U.3) and 23.0% (ShadowStats). [The U.6 unemployment rate containing the short-term discouraged workers is 11.2%.]

[The 23% unemployment rate is consistent with the declining Civilian Employment-Population Ratio and the declining Labor Force Participation Rate. The rise in discouraged workers is reflected in the decline in these ratios.]

[Are you surprised that the government lies about the number of new jobs and the unemployment rate? Why are you surprised? The government lies about everything–”Iraqi weapons of mass destruction,” “Iranian nukes,” “Assad’s use of chemical weapons,” “Russia’s invasion of Ukraine,” etc.]

[John Williams also reports that the Birth/Death Model used by the Bureau of Labor Statistics assumes that more jobs are created each month by new startups than are lost by companies going out of business. The excess of new startups over closures currently adds an average of 61,000 jobs each month. In other words, these jobs are spun off of the assumptions of a model and are likely to be phantom jobs.]

[There is also the issue of data falsification by the Census Bureau reported in the New York Post by John Crudele and under congressional investigation. http://nypost.com/2015/01/06/call-congressman-for-some-good-common-census/ ]

Note: brackets indicate my comments.