Pass the Prozac to the Downbeat Business Media
February's Employment Situation Report, released last Friday by Uncle Sam's Bureau of Labor Statistics (BLS), had good news and bad news.
Good: The nation's unemployment rate fell from 4.9% to 4.8%, the second consecutive 0.1% drop.
Bad: The number of jobs in the economy fell by 63,000 (105,000 including downward revisions to previous months).
You don't have to be a genius to correctly guess which item the media's "creative" headline writers and reporters ran with:
- At the Toledo Blade ("Biggest workforce reduction in 5 years leaves 63,000 out of work; recession fears rise"), there was talk of a "shower of pink slips."
- Pink was also a popular color at South Jersey's Courier Post ("Loss of jobs serious sign"), which told us that "Nationally, 63,000 workers received pink slips."
- The Milwaukee Journal Sentinel was not left behind in its headline ("Job loss frightens observers"), while moaning about "economic illness" and "our worst fears realized."
Reporters writing of "pink slips" had no credible basis for their claim. Many workers could have, and probably did, leave their jobs voluntarily. If those jobs weren't filled, there were no "pink slips." But the erroneous imagery of heartless employers kicking the hapless help to the curb is powerful, isn't it?
Don't get me wrong; there are plenty of reasons to be concerned about the state of the economy. But "frightened"? The unemployment rate went down, remember?
The biggest offender by far in last Friday's reporting was the Associated Press. The AP not only created a "possible" meme with no basis out of whole cloth, but allowed future reports feeding off that meme to treat it as an established fact.
The original source of the meme was AP's Jeannine Aversa, who, shortly after the BLS report's release, started up the spin cycle (bold is mine):
Employers cut 63,000 jobs in February, the most in five years and the starkest sign yet that the country is heading dangerously toward recession or is in one already.
The Labor Department's report, released Friday, also indicated that the nation's unemployment rate dipped to 4.8 percent as hundreds of thousands of people -- perhaps discouraged by their prospects -- left the civilian labor force. The jobless rate was 4.9 percent in January.
First, if she was going to deal with the "hundreds of thousands" who left the workforce in February (a seasonally adjusted 644,000), Aversa owed it to readers to say something about the seasonally adjusted 502,000 who entered the workforce in January. That nets out to only 142,000 over two months. But she didn't.
Her "discouraged worker" explanation for the departures also doesn't hold up. Here's BLS's statement relating to this:
Among the marginally attached, there were 396,000 discouraged workers in February, about the same as a year earlier.
How could Aversa make her "discouraged worker" claim -- even as a "perhaps" -- with a straight face?
Aversa's bogus speculation didn't prevent AP colleague Sara Kugler from compounding her error less than 24 hours later.
Towards the end of her report from the Democratic primary campaign trail, Kugler turned Aversa's possibility into supposedly established reality (bold is mine):
[Hillary Clinton] told audiences in both states on Friday that the Labor Department's report on Friday showing a loss of 63,000 jobs nationwide in February is an alarming sign of economic troubles.
"The economic policies of the Bush administration are failures. People are out of work, and the work they have doesn't pay what it used to pay," Clinton said in Hattiesburg, Miss.
The Labor Department's report also indicated that the nation's unemployment rate fell to 4.8 percent as hundreds of thousands of people gave up looking for jobs. The jobless rate was 4.9 percent in January.
That's a pretty good trick AP pulled, isn't it?
Despite the hoopla, February's job losses are historically minor. Look it up yourself by selecting the first item at the top of the "seasonally adjusted" column at this link; there have been over 20 months in the past 20 years where reported job losses were 100,000 or more -- and off of a smaller employment base.
The fixation on the job-loss number also obscures these additional good news items from February:
- The number of unemployed went down by 195,000 in February, after a reduction of 89,000 in December.
- African-American unemployment dropped by 0.9%, from 9.2% to 8.3%.
- Teenage unemployment dropped by 1.4%.
Awful reporting such as what I have just described has been a routine occurrence for many years. Is it any wonder that consumer confidence, dutifully reported by Ms. "Self-Fulfilling Prophecy" Aversa, is at its lowest level since 2002? With the non-stop Old Media gloom about the economy, the wonder is that we have the strength to get out of bed every morning.
Tom Blumer is a CPA based in Mason, Ohio, outside of Cincinnati. He presents personal finance-related workshops and speeches at companies, and runs BizzyBlog.com.