Friday, February 3, 2012

Fake statistics makes great news

Great news! "Jobless rate at 3-year low as payrolls surge!" Announces jubilant Reuters.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent - the lowest since February 2009 - from 8.5 percent in December.

Another 4 years, anyone?  

As the saying goes: "There are lies, damn lies, and statistics." This jobless
rate falls in the last category. That's  because we're fed the official, heavily-massaged U-3 unemployment rate. The labor force participation rate has fallen to a 30-year low (see figure). Fewer people in the workforce means the percentage of unemployed people in the workforce drops.

The drop in labor participation was due to 1.2 million dropping out of the labor force last month!

This sounded so bad I had to check it. It's true, as you can see in this video from Rick Santelli of CNBC Business News network.

So, to recap: 243,000 jobs created, 1.2 million left the workforce has been presented as great news.

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