'Seasonally Adjusted' Hijinks? The Questionable June Jobs Report
That said, Team Obama had no real grounds for complaining about May 2012's seasonally adjusted results. That's because May's seasonally adjusted figures fairly reflect what we would have expected to see if BLS had used May 2004 through 2007, the last four years during which the economy was exhibiting typical seasonality, as their basis.
June (the red boxes) is an entirely different story. This time, in both categories, actual 2012 job growth trailed 2011 by 60,000 or more; but again, the seasonally adjusted results hardly changed.
Combine the above comparisons of June 2012 and 2011 with a look at June 2004 through 2007, and you're left wondering how Friday's seasonally adjusted figures could possibly have come in as high as they did:
This year's seasonally adjusted results are well outside the range of the five years presented in an unwarranted favorable direction. No one would have had any right to complain if the bureau had hung seasonally adjusted goose eggs in each category.
The bottom line is that in the historical context of recent non-recessionary years, June 2012's raw numbers reveal a job market that has essentially ground to a halt -- and that's before we get to the important underappreciated observations Carson made at IBD:
- "The employment-to-population ratio for those aged 25-54 dipped to 75.6% in June, down sharply from 80% in January 2008." That's also lower than it was when the recession officially ended in June 2009. Millions of people in their prime earning years have dropped out of the workforce, and they haven't seen a reason to try to get back in. If they were looking for work, the unemployment rate would more than likely be over 10%.
- "Entrepreneurial activity (is) fading. The number of startup firms has crashed from pre-recession highs, still near levels previously seen in the early 1980s." This development throws into question the validity of BLS's monthly "birth/death" adjustments. In June, it estimated that otherwise undetectable start-ups and very small businesses, net of those which went out of business, added 124,000 jobs. If it turns out that they're only half-right, June's real hiring activity was at a level one would see during a recession.
- "Meanwhile, the number of employees at startups has plunged, with a greater share of new firms with no employees -- one-man shops." In normal recoveries, entrepreneurs are eager to hire people to take advantage of extraordinary opportunities. That's mostly not happening now, for a number of reasons, including mediocre economic growth, the uncertain costs of Obamacare, overbearing overregulation, and perhaps most ominously, "Taxmageddon," which threatens to throw the economy into a full-blown recession next year -- that is, if it isn't already in one now.