Because the economy is collapsing – but government (and major financial institutions) haven’t fully figured this out yet – from Seeking Alpha, quoting Comstock Funds:
The Bureau of Labor Statistics (BLS) recently announced that they will be making downward benchmark revisions to past monthly nonfarm employment data that casts doubt on the validity of the recent figures as well. As we will explain, it is highly likely that substantially more jobs are now being lost than is currently reported.
The BLS makes annual revisions to the previously announced payroll reports to account for job increases or decreases that were not picked up in the initial data. The main reason for the differences in the preliminary and final reports is the difficulty in getting numbers from the many small and medium sized business and accounting for new startups and firms going out of business. To make an educated guess at the data that they are missing, the BLS uses something called the ARIMA time series model (commonly called the birth/death model) to estimate employment changes resulting from business births and deaths that are not accounted for by other methods. The model is based on the actual births and deaths over the five prior years.
As you can imagine, when the prior five years were a period of economic expansion, the application of these numbers to a period of recession can result in a substantial overestimation of job changes, and that is evidently what happened recently…
…In the current instance the BLS announced that preliminary tabulations indicated they would have to reduce the estimate of total nonfarm employment by about 824,000 for the year ended March 31, 2009. On average, therefore, employment for the period was overstated by about 68,000 per month. Interestingly enough, the birth/death adjustment had added about 717,000 jobs during the same period. So it’s apparent that the benchmark revision will more than wipe out the entire amount added by the model.
What does this mean for the period following March 31, 2009, which will not be revised until next October? For the six months since March 31st the birth/death adjustment has added 815,000 jobs, an average of 135,000 per month. Since small and medium sized firms are suffering from severe credit restrictions, they are much more likely to have reduced employment significantly rather to have added that many jobs. That means current monthly job losses may be running as much as 135,000 higher than is currently being reported…
Mish’s has been on this, from what I can tell, for years now…but the most recent noting of the flawed “birth/death” figure is right here. Essentially, what the BLS has been doing is pretending that we’re creating jobs – and thus when BLS says we shed 263,000 jobs in September of 2009, its a bogus number. That number would be correct if we were creating 135,000 jobs per month…but as we’re probably creating only a tiny fraction of that number, we have to figure that the real number of jobs lost in September might have exceeded 350,000. This might help you make sense of the fact that after weeks of BLS saying 400,000 or so new claims for unemployment were made, that the total jobs lost for the month was 200,000 or so.
This recession is nothing of the kind – it is a Depression. The government and the banks (and stock marketeers playing the “greater fool” theory of investment) are talking up recovery…and, of course, the numbers we’re about to get will almost certainly show that the recession “ended” in the late Spring. But it simply isn’t true – and won’t be true until we start creating wealth. Our first step in this will have to be getting liberals – from Obama on down – to understand that money isn’t wealth. You can spread money around all you like, but until people actually get to work making, mining and growing things, no wealth is being created. Once you realize what wealth is, then the policies needed immediately present themselves – cut taxes, cut regulations, provide credit and then get the heck out of the way.
But I don’t hold out much hope for a swift education of our liberal friends – and so, the next crash is almost inevitable. And it will be quite a mess…the continuing financial crisis on steroids as all that government fiat money light an economic conflagration not seen in 75 years, if ever.
UPDATE: Wages plunge.
Blogs For Victory 