Get ready for another ride on the economic roller coaster.
Last week, we got bad news about the economy when it was announced that the US gross domestic product barely rose in the first three months of 2015.
And it looks as though the 0.2 percent annualized growth reported by the Commerce Department for the winter months will turn into a contraction when revisions are made at the end of May.
Worse, GDP in the second quarter hasn’t gotten much better. The Atlanta Federal Reserve’s GDPNow, which tracks the economy in real time, has GDP growing at a wimpy 0.8 percent annual rate in the second quarter.
So the economy is doing poorly, right? Right — but you might not believe that in a few days. Why not?
Well, hop aboard the roller coaster.
This Friday, the Labor Department will announce job growth and the unemployment rate for April and — drum roll, please — it probably won’t look as ugly as the GDP.
That’s because Labor uses trick statistics when it gives a picture of the springtime job market.
Each spring, Labor starts adding phantom jobs to its count — jobs they guess have been created but can’t prove have been created.
Some of that phantom spirit is tied to the weather. No, really. At Labor, good weather = the birth of companies = more jobs.
And even in this day and age of instantaneous knowledge of everything, Labor still guesses at how many jobs these newly born companies are generating.
When it reports April employment numbers this Friday at 8:30 a.m., Labor will include about 263,000 phantom jobs.
At least, that is how many phantom jobs it factored in last May.
This May, the Bureau of Labor Statistics will add around 204,000 phantom jobs. In June through August, that number falls to 129,000 and then to 122,000 and then 104,000.
And there is no telling if any of those jobs actually exist. In fact, what if companies were quietly dying this spring instead of sprouting up like so many daffodils? Well, Labor would worry about that later on.
Of the 263,000 or so phantom jobs that will be added through guesstimates in April, probably 50,000 or so will — thanks to seasonal adjustments — be added to the “realer” number to produce the total Labor will announce.
Journalists and economists will report whatever Labor puts in the headlines without question.
But now you know better.
So it won’t be very hard to beat March’s disappointing 126,000 new jobs total. And it probably won’t be too difficult either to exceed the 230,000-job growth that the “experts” on Wall Street are anticipating for April.
But Friday’s job growth numbers will be an illusion. Misleading. A joke. And anyone looking at these figures going from poor to good and back to poor is likely to get whiplash.
There’s one more thing that needs to be said about Friday’s figure. If the number turns out to be disappointingly below Wall Street’s 230,000 guess, the economy is really in trouble. If the number reported is bad, it would have been even worse without Labor’s thumb on the scale.
The other important Labor-related number that will be reported on Friday is the unemployment rate, which was 5.5 percent in March.
The experts are expecting that number to hold for April, but it really doesn’t matter. The unemployment rate is a fraud on several levels.
In the first place, the figure has never included people who have given up looking for work because they are convinced they can’t find a job. So — in other words — if you have been out of work for a very long time and disillusioned about finding employment, Labor doesn’t count you as unemployed.
On that basis alone, the fact that anyone — much less the Federal Reserve — relies on this figure is incredible. But, as I’ve been writing for more than a year, the data-gathering process that brings about the unemployment rate is untrustworthy.
As I’ve written many times before, the Census Bureau collects the unemployment rate data under contract from Labor. In fact, this is the Census’s biggest contract — its biggest money maker.
More than a year ago, I found that some people at Census were cheating when they fraudulently filled out the surveys that went into the unemployment rate.
Before I got on their case, Census was easily able to achieve the 90 percent quota required by Labor.
Now Census is missing that 90 percent quota on a regular basis.
For instance, a source tells me that nationwide in April, only 87 percent of the unemployment interviews were successfully completed.
Of the six Census regions, New York had the lowest completion rate at 83.09 percent; Philadelphia had 84.25 percent; Chicago 88.91; Atlanta 89.59; Denver 87.55 percent; and Los Angeles 88.81 percent.
That’s right, not a single region hit Labor’s minimum 90 percent success rate. And Labor pretends that nothing is amiss.
And Census only got to miss by a little after it extended the unemployment survey for an extra day even though there was no obvious reason — like bad weather, a holiday or a Martian invasion — for doing so.
Until Labor acknowledges that it is having quality-control issues with the unemployment rate — to put it nicely — nobody should even bother wasting the energy it takes to write about it.
But I will anyway. More to come on Thursday.
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