Jack Welch stated what many of us, perhaps even the majority of us are thinking - Obama cooked the books on the jobs numbers. You have already read Welch's knee jerk response to the September jobs report but here it is one more time:
I have friends and associates that tend to be a little on the radical side. There are a few in my circle who are Obama supporters but the majority are Obama critics. I did not say Romney supporters - I said Obama critics - and the more appropriate term probably should be Obama haters.
As a rule I elicit disdain in conversation when I try to dispel the conspiracy theories. I tend to trust government statistics on money supply, inflation, GDP, unemployment and the other economic data our government collects and disseminates to us each month.
My view on conspiracy theorists is that they are ill informed and base their conclusions on incomplete data. They tend to listen to the right wing talk show hosts that support their own views with supposition and hyperbole. Where a strongly biased view exists - in this case against Obama - I tend to summarily discount all the rhetoric about conspiracy.
That said, yesterdays jobs number shocked me. It has caused me to reconsider and to closely examine the facts. The sharp and unexpected drop in unemployment is just too convenient and fly's in the face of reality. There are a lot of things going on right now that just do not add up.
Just how far would a sitting President go to get re-elected? In Obama's case we know a little public deception is within the boundary lines. I am reminded of the "hot mic" conversation between Russian President Dmitry Medvedev and President Obama a while back on the issue of missile defense:
"Yeah, I understand. I understand your message about space," President Medvedev replied. "Space for you…"
"This is my last election," Obama observed. "After my election I have more flexibility."
"I understand," responded Medvedev. "I will transmit this information to Vladimir."
You can spin that statement anyway you want but it still comes out loud and clear - Obama is willing to concede to the Russians but he must first get elected and if he were to be forthright with the American people on this matter he would not get elected.
The question I have been asking myself over and over again for the last 24 hours is this - could Obama really influence the Bureau of Labor Statistics to doctor the books on the unemployment picture?
These questions prompted me to do a little investigating. Just how independent is the Bureau of Labor Statistics? The following excerpt provides the history of the BLS:
The Bureau of Labor was established in the Department of the Interior by the Bureau of Labor Act (23 Stat. 60), June 27, 1884, to collect information about employment and labor. It became an independent (sub-Cabinet) department by the Department of Labor Act (25 Stat. 182), June 13, 1888. It was incorporated, as the Bureau of Labor, into the Department of Commerce and Labor by the Department of Commerce Act (32 Stat. 827), February 14, 1903. Finally, it was transferred to the Department of Labor in 1913 where it resides today. The BLS is now headquartered in the Postal Square Building near the United States Capitol and Union Station. The current Acting Commissioner of the BLS is John M. Galvin.
As it turns out the Bureau of Labor Statistics is actually a sub-cabinet department under the authority of the Secretary of Labor, Hilda Solis. Solis is a staunch liberal and apparently a rather divisive figure according to her bio. After reading her bio I am inclined to place her in the camp that believes "the end justifies the means". I have provided the link to allow you to read the bio and draw your own conclusions.
When I attempted to do a little investigative work on John M. Galvin, the current Acting Commissioner of the BLS, my attempts to uncover anything at all about the man were thwarted. The only thing I could find on Galvin is the following excerpt from the BLS website:
John M. (NASDAQ:JACK) Galvin serves as Deputy Commissioner of the Bureau of Labor Statistics. From 1998 until September, 2011, Mr. Galvin served as Associate Commissioner for Employment and Unemployment Statistics, where he directed the Bureau's programs of national, State, and local information on the labor force, industry and occupational employment and wages, employment projections, and employment dynamics. Many of these programs are conducted in cooperation with the U.S. Census Bureau and with the State Employment Security Agencies.
Mr. Galvin served as Assistant Commissioner for Producer Price Indexes from 1994 to 1998, as Director of the BLS Quality and Information Management Staff from 1991 to 1994, and in a variety of positions in the Consumer Price Index program from 1978 to 1991.
Mr. Galvin holds a B.A. in Economics from the University of Illinois and an M.A. in Economics from George Washington University.
The head of the Bureau of Labor Statistics is a Presidential appointment but requires Senate confirmation. In an article appearing in the New York Times on January 7, 2012, it was noted that President Obama was circumventing Senate confirmation hearings of his appointees by making "recess appointments". Mere formalities like Senate confirmation of his appointees are apparently unnecessary in Obama's world.
Keith Hall preceded Mr. Galvin as the Commissioner of the Bureau of Labor Statistics. Hall was an appointee of George W. Bush and served in that position for a 4 year term beginning in September of 2007. Upon expiration of his term in September, 2011 President Obama was able to appoint his own head of the BLS - John M. Galvin.
Mr. Galvin is holding his position as "Acting Commissioner". I'm not sure why Mr. Galvin holds the position as a fill in. Apparently President Obama has selected a permanent Commissioner - Erica Groshen - but she has yet to be confirmed by the Senate.
Notwithstanding the temporary status of Mr. Galvin, the fact remains he is President Obama's man and he is running the show at the BLS for the time being. On June 6, 2012, Darrel Issa's Committee on Oversight and Government Reform conducted a hearing on the committee's concerns about the BLS:
ADDRESSING CONCERNS ABOUT THE INTEGRITY OF THE U.S. DEPARTMENT OF
LABOR'S JOBS REPORTING
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
JUNE 6, 2012
The following excerpt from Chairman Issa's opening statement leaves little doubt that the Obama administration is willing and apparently able to manipulate the BLS data to achieve certain objectives:
"There are 33 times as many so-called green jobs in the septic tank and--you can't make these things up, guys--septic tank and portable toilet servicing industry as there are in solar, energy, and utility areas. More than 160,000 of these green jobs are related to school bus drivers.
Using these tactics to manipulate the number to mislead the American people is nothing short of embarrassing and a betrayal of the standards that President Obama established for his administration. Transparency begins with honesty. You cannot send out false propaganda and then say you are transparent. The truth is essential. The barest of the truth is essential; unfiltered if you are to be transparent."
Secretary Solis has feigned shock at the idea that her figures would be questioned. Former Commissioner Hall and Acting Commissioner Galvin have also weighed in on the matter explaining to all of us the extreme security measures the BLS uses to protect the data. Yet we know that as early as 4 months ago the House Oversight Committee was raising the issue of public deception and deliberate distortion of the data.
So how did we actually get the largest one month drop in the unemployment rate in 30 years? That's right - the largest single one month drop in unemployment in 30 years. Should it be a surprise to anyone that the impressive improvement on the jobs front is called into question? Is the comment Jack Welch made really that outrageous?
Certainly the disappointing 114,000 new jobs number does not support a .3% drop in unemployment. This number was pretty close to the average guess and a number that supports the current trend - a downward trajectory on the month to month number of new jobs created.
As it turns out a revision in the July and August numbers provide a part of the explanation. The BLS increased the job additions in those months by 86,000. Since 91,000 public sector jobs were added during these months the net effect was actually a 5,000 reduction in private sector jobs.
Additionally, a sharp jump in part time jobs of 600,000 was reflected in the September report. The large jump in part time jobs has caused some to suggest that the BLS has suddenly changed it's method of accounting for part time workers in the total numbers.
The BLS, as standard operating procedure, makes two adjustments to monthly numbers before freezing the number until a new annual benchmark period is established. In other words, the July revisions will now remain constant but the August and September numbers will be revised again in the next report. This automatic revision process is in place to account for information that is reported after the preliminary number for a given month.
No doubt this revision process is justified in order to provide complete data. Still, it also sets up the opportunity for erroneous data to be presented without long term consequence since the automatic revision process will right the deficiencies. Unfortunately, these corrections - when they are made - will be after the election.
There is one more jobs number due out before the election. One has to wonder what adjustments might appear in this last pre-election report. Whether the September report is actually reflective of real economic improvement or simply deceptive accounting on the part of Obama's cabinet to affect the desired end is probably not something we will be able to determine prior to the election.
A preponderance of circumstantial evidence suggests that Jack Welch may be right. Hilda Solis, the Secretary of Labor, has defended the numbers reported by the BLS but incorrectly stated that the upward revision in the 86,000 jobs in July and August were private sector jobs. That statement by Solis was not correct. It was public jobs that were added resulting in a private sector decline of 5,000 jobs. Additionally, there has been no explanation to date on the dramatic jump in part time jobs. We should expect more from the Labor Secretary in light of the fact that the Obama administrations integrity is being called into question.
We also know that the BLS played games with the "green jobs' numbers. To date there has been no plausible explanation for this blatant distortion of the facts - another example of the "end justifies the means" mindset that seems to be pervasive among the die hard that are loyal to Obama.
I guess in the end we all have to draw our own conclusion. As I stated at the start of this article I generally refute anyone who wants to challenge the data we all rely on to make investment decisions. My investigation into the matter, although not conclusive, suggests that the BLS had the motivation and the means to perpetrate a deception on the voters just one month before the election. As far as I am concerned, one would have to be naive to think that this remarkable overnight improvement just one month before the election reflects reality or that it is coincidental.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.