More Happy Talk On Jobs

Well, you didn’t expect the Bureau of Labor Statistics to tell the truth right before the election did you? The republicans are having a hard enough time retaining seats in congress. They do not need any bad economic news going into next Tuesday.

Let’s look at a few numbers. According to the BLS unemployment fell to 4.4%. Seems good doesn’t it? There were 92,000 new non-farm jobs created in October. Look’s good from here, right? Those are the numbers that are picked up by all of the mainstream media and with those numbers we may see the stock market finish in positive territory today.

Now let’s look at the dark not-so-pleasant underbelly of these numbers. Remember the CES birth/death model that the BLS uses to determine job creation or loss. Well, that model accounted for 73,000 of those 92,000 thousand new jobs. The CES model is a statistical model used to estimate job creation/loss. The BLS cannot survey every business in the country to determine how many new jobs are out there, so they use this statistical model. The only problem with statistics is that they can be manipulated to “prove” just about anything you want to prove. Just ask a statistician.

The CES Birth/Death model has accounted for over 880,000 new jobs since the beginning of the year. There is no hard proof anywhere that these jobs exist, they are just statistics.

What about the drop in unemployment you ask? Well, two things come to mind. First, if your brother who used to work as a programmer gets laid off because all the good programming jobs have gone to India, and he cannot find another decent paying job before his unemployment benefits run out, he drops off of the unemployment count.

If he takes a job at Mickey D’s flipping burgers to feed the kids, he drops off of the unemployment roles. His plight is now calculated in another statistic known as underutilized or underemployed, also known a U-6. That number comes in at 7.6% of the population. So based on the recent birth of this country’s 300,000,000^th citizen, that means that around 22.8 million people have taken lower paying, lower skill jobs just to make ends meet. Not exactly the happy news we’ve been hearing.

Now on the financial side of the picture, this interesting statistic pops up. The banks in this country have a whopping $40 billion in reserves. Since none of us has ever touched $40 million that seems like a lot of money at first glance, right? But that is the total reserves that all of the banks hold against $5.5 trillion in savings. That is $0.0073 for every dollar in savings. Less than a penny.

Wouldn’t want the general population to get a hold of that little tidbit of information would we? Can you say bank run?

Oh sure, the Fed’s can just print up truckloads of dollars to stave off a bank run, but then you have to deal with runaway inflation. Talk about walking a fine line. I wouldn’t want to be in their shoes.

Got gold?