(excellent) ranting from David Stockman, Director of OMB under Ronald Reagan
(OMB was and still is : the Office of Management and Budget)
(BLS is : Bureau of Labor Statistics)
whole thing is here :
Message 30459085
two choice parts :
1. <<<<< ... the BLS always uses a big seasonal adjustment (SA) in January so that’s how they got the positive headline number. But the point is that the seasonal adjustment factor for the month is so huge that the resulting month-over-month delta is inherently just plain noise.
To wit, the seasonal adjustment factor for the month was 2.165 million. That means the headline jobs gain of 151K reported on Friday amounted to only 7% of the adjustment amount!
Well, just consider two alternative seasonal adjustment factors for January that have been used by the BLS in the last five years. Had they used the January 2013 adjustment factor this time, the headline gain would have been 171,000 jobs; and had they used the 2010 adjustment factor there would have been a headline loss of 183,000 jobs. >>>>>
2. <<<<< ... the world would be far better off if they simply shutdown the BLS. There are already far more timely, accurate and honest price and inflation indices published by a variety of private sources.
And if we need aggregated data on employment trends, the U.S. government itself already publishes a far more timely and representative measure of Americans at work. It’s called the Treasury’s daily tax withholding report, and it has this central virtue. No employer sends Uncle Sam cash for model imputed employees or for 2.1 million seasonally adjusted payroll records that did not actually report for work.
Stated differently, the daily tax withholding report is the real thing and the whole thing; it captures the labor input of the entire U.S. economy in real time, and does not get revised and manipulated endlessly over the course of months and years from its original release.
Why is this important? My colleague Lee Adler has been tracking the daily withholding reports for more than a decade and knows their details and rhythms inside-out. He now reports that tax collections are swooning just as they always do when the U.S. economy enters a recession.
In fact, the latest report as of February 6th indicates that:
“The annual rate of change in withholding taxes has shifted from positive to negative. It has grown increasingly negative in inflation adjusted terms for more than a month. Following on the heels of a weak December, it is a clear sign that the US has entered recession……..the implied real growth rate is now roughly negative 4.5% per year……it is the most negative growth rate since the recession. It follows the longest stretch of zero growth in several years, this can no longer be considered temporary or an anomaly. It has all the earmarks of a trend reversal and is getting worse.” >>>>>
Jon.
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