This last week the Bureau of Labor Statistics (BLS) released their most recent batch of data showing that the private sector created 243,000 new jobs. Economists have been relishing in the numbers and taking these new figures as a sign that the economy is ready to go on a tear. The only bad news regarding this figure is that it was fabricated entirely out of thin air; the government lied to you.
It is no shock that the government manufactures and manipulates data; they have been doing it for decades. M3, which is the only true measure of money in circulation, is no longer published by the federal government, as it tends to paint a scarier inflation picture than M1 does. CPI and GDP are constantly under "revisions," and unemployment is no different.
Most economists are intelligent enough to verify or discredit these numbers by doing their own independent research, however many well known professionals have been blindly accepting these government manufactured statistics (the best example of this was Suze Orman on Politically Incorrect with Bill Maher gushing over this data). It is a shame that with all of the degrees they have, books they've written, and supposed intelligence they have, that these "best and brightest" of the financial industry can be so naïve and stupid.
According to Lee Adler and the Washington Examiner (via WashingtonsBlog.com), when you examine the raw data (not revised or altered) you can see that January 2012 was a horrendous month for job creation. To quote WashingtonsBlog.com, the total number of employed persons FELL by 737,000 last month. January also showed a steep decline in Labor Force Participation rates and a record number of people leaving the work force, such as persons who have given up looking for employment, employees who have accepted part-time work but would like full-time employment, persons whose unemployment benefits have run out, etc. Popular financial blog ZeroHedge.com was cited by WashingtonsBlog.com for pointing out that 1.2 million people dropped out of the labor force last year. Mind you, if a person has "dropped out of the labor force," they are no longer considered unemployed as far as statistics go.
Adler points out that U-6 is the much more valid measure of unemployment, just as M3 is the more valid measure of money in the economy. The BLS defines U-6 as "Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force." That number, not seasonally adjusted, was 16.2% for January of 2012, up 1% since December of 2011 and a far cry from the published 8.3%.
The easiest proof that we have that more people are not gaining employment comes through Tax Receipts. When we look at Federal Tax Receipts we can see that they have been relatively flat since April of 2011 which forces the question, how can Tax Receipts be steady yet more people are supposedly in the workforce and paying payroll taxes? The answer is that more people are in fact not being employed.
The numbers can be spun, revised and adjusted however the statisticians would like, however published numbers must be able to be validated. These most recent employment numbers are a prime example of invalid data being pushed out to the public. This is but one of many cases that prove the importance of doing independent research and not taking published statistics at face value; it can prove to be a very costly mistake for investors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.