Tax data suggests job market remains weak
(MoneyWatch) COMMENTARY Growing retail sales and employment has stoked optimism that the U.S. economy is recovering. Yet the government's own statistics suggest the jobs numbers are weaker than they look.
The federal Bureau of Labor Statistics reported last week that 227,000 jobs were created in February, and it revised the number of jobs added in January up to 284,000. In assessing these numbers, however, it's important to underscore two key words: "seasonally adjusted." Before being adjusted for the time of year, the data show that the economy actually lost 2.7 million and 2.6 million jobs in February and January, respectively. Why the huge discrepancy? According to the BLS, it reflects the following:
... a regularly recurring seasonal movement that can be measured from past experience. By eliminating that part of the change attributable to the normal seasonal variation, it is possible to observe the cyclical and other nonseasonal movements.
In other words, BLS' job-growth calculations are at least partly the result of a methodological quirk that, depending on previous seasonal employment patterns, skew the results. Meanwhile, there are more accurate methods of gauging job-creation. One is counting daily income-tax deposits to the U.S. Treasury Department from all salaried employees. After all, who is going to keep better track of who is working and who isn't than the IRS?
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As it happens, the folks at Trimtabs Investment Research analyzed BLS' numbers and came up with a figure of 149,000 jobs added in February and only 45,000 in January. Trimtabs CEO Charles Biderman writes in his blog:
In February, a midwinter month historically, less people work on average primarily due to weather. The BLS current estimate is 1.53 million jobs need to be added to those actually working in February to come up with 227,000 new February jobs. Income tax collections say to us that the BLS guess is too high. But so what, who cares as long as the number reported looks good?
Some critics of the Obama administration will no doubt characterize the government's job reporting methods as a gimmick aimed at helping the president's re-election chances. It's not. Or at least such methods are no more dubious what previous administrations have employed. The BLS spin on the numbers is nothing new, amounting to a non-partisan (or entirely partisan, depending on your perspective) effort to make those in charge look better.
