Is the Labor Department playing politics with job numbers?




According to Bloomberg:



Fact is, initial estimates draw the most reaction from media, while the revisions are treated less newsworthy, despite their relative significance. How beneficial it is to muddy this information is debatable, I suppose, but the trend certainly warrants some explanation.  The media and the public pay especially close attention to unemployment rates. Having more favorable numbers blasted out by newspapers and television before hard reality hits can’t hurt the president.

It’s what Zero Hedge calls “Initial Claims Propaganda 101“:


I emailed Dr. Anthony Sanders, a Professor of Finance at George Mason University, wondering why he thought this was happening — is it a problem with methadology or just wishful thinking? He writes: “The stock answer is that the methodology is flawed (surveys) and better data comes in after the fact. But 56 out of 57 weeks indicates that the BLS is playing games with the data. Fool me once shame on you, fool me twice shame on me, fool me 57 times shame of the BLS… The problem with BLS numbers are the same ones as the inflation numbers. The collecting and processing of the data is in the hands of those who gain or lose from the numbers. Massive moral hazard risk.”

Gathering weekly, or even monthly, data of this scale is no doubt exceedingly complex so Americans can forgive revisions. (Though, wouldn’t it be nice to outsource this work to private firms that have reputations to protect, rather than some bureaucratic entity? Naturally, a non-starter.)

The problem is that even other government reports that matter to the market do not suffer from similar consistency problems. Sure there are revisions, but they move up and down with nearly the same regularity. Why is it that unemployment numbers always seem to shift in the same direction?

Well, I guess a report on the situation is forthcoming… you know, at some point.