Can we talk about unemployment in the U.S.? And can we talk about conspiracy theories?
I thought you'd say "yes." I can almost hear you saying, "Hell yeah, bring it on!"
So, let's have at it.
Let me say my piece, and then you can chime in.
I'll start by saying I don't think there's any conspiracy to manipulate the unemployment numbers.
You know, the numbers that came out on Friday and freaked everybody out.
Somehow, right before the election and right after President Obama fell flat on his face, after Mitt Romney knocked the champ (don't get mad, he's not my champ, he's the champ because he's the incumbent) down almost for a ten-count, the bloodied champ bounds off the canvas and stands on the ropes proclaiming victory over economic malaise because the unemployment rate fell below 8%.
Well, what's freaky about the unemployment number, the U3 number, the most widely watched and reported measure of unemployment in the country, maybe even the world, is that it fell from 8.1% in August to 7.8% the September.
What's got folks in an uproar (folks that aren't so folksy when it comes to the champ) is that it looks pretty conspiratorial that unemployment hasn't been below 8% in 43 months, not since Obama got into office. And all of a sudden it drops in August to 8.1% from July's 8.3%, and far more freakily, drops to 7.8% (that's below 8% for you non-math types) in September from 8.1% in August.
But before I give you my thoughts on why I don't think there's a conspiracy...
Okay, let's stop right there. The truth is I DO believe in conspiracies.
I believe that John Kennedy was assassinated in a coup'd'état in Dallas. Who did it and why? Figure it out, the facts are all there.
I believe that the Federal Reserve System is a front for the power, and of course, moneyed elites who run America for the benefit of its Club Fed members. The facts are all there.
Do I believe in other conspiracy theories? You bet I do. I just don't believe in all of them, especially the ones that can't be proved. Theories are fine, but give me some facts.
But I digress.
Does it smell like a conspiracy, some manipulation of the unemployment numbers that look so much better and may now aide Obama's reelection campaign?
You bet it does.
The U3 number is calculated by means of two surveys. There's the survey of businesses (sometimes called the "establishment"), and there's the "household" survey of... duh, households.
The business survey for September wasn't so hot. Manufacturing lost 16,000 jobs, which came on top of a loss of 22,000 manufacturing jobs in August. But there were some net gains in the service sector, notably in healthcare and education. And government (they're a service outfit, right?) gained 10,000 jobs; sadly that's the third monthly gain in a row for the govies.
The big gains came in the household survey. Are you ready conspiracy theorists? Some 873,000 jobs were filled in September in the household arena, which includes the self-employed and household workers.
What's strange and almost conspiratorial is that in 2012 the average monthly gain in employment has been 146,000 (the average monthly gain in 2011 was 153,000). But September's gain was 114,000.
So where did the 873,000 new household jobs (of which 582,000 were part-time jobs) come from, or go, if the net gain was 114,000 for September? And, how fortunate was it that July and August's numbers were adjusted upwards by another 86,000 jobs filled?
How did the unemployment rate drop from 8.1% to 7.8% about a month before the election?
The answers are in the wacky way the Bureau of Labor Statistics (a division of the Labor Department) calculates the numbers. Here's a quick guide on how they come up with the Monthly Situation Report.
If you read what's there you'll see that the surveys are prone to all kinds of statistical and empirical vagaries.
Anyway, the U6 number didn't move at all. That's the number that counts part-time workers looking for full-time work as unemployed. And it's still way too high.
No one seemed to say that that number was manipulated because it didn't go down.
The reason I don't believe the better than expected U3 number was the result of a conspiracy is because the BLS's surveys are questionable to begin with and are pretty much always subsequently adjusted, sometimes by huge amounts.
The civil servants over at the BLS are long-time employees, so it's not as if they come into office with each new administration and work for them.
Besides, if the BLS was to be manipulated it might be by its Commissioner, the one that the President appoints. And the commissioner now...well, there isn't one. Obama hasn't nominated one. The post is vacant.
Furthermore, the BLS shares all its data with private sector economists, analysts and academics. Is there anyone out there saying the numbers don't add up?
For all the Obama haters that are calling the numbers a conspiracy, I say, come on, where are the facts, where is the proof?
It's all so much political dynamite being exploded in a contentious race. But, I don't believe that this time there's a conspiracy.
And my last point is this...If I was going to orchestrate this kind of conspiracy I'd have done it several quarters ago. That way no one would look at new numbers as out of left field, and at unemployment falling below 8% right before the election and point a finger and say, "Ah-ha! Got ya!"
What do you think?
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Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
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