John Crudele on April’s phony-baloney jobs report:
If you read Thursday’s column, you already know that I predicted growth would be better than the Street was anticipating. That’s because the Labor Department adds a load of phantom jobs in April.
The government tries to estimate the number of new companies it thinks sprouted up during the month based on something called the birth/death model. The 288,000 figure included 234,000 of these phantom jobs.
Before you start doing the math and come up with the wrong answer, I have to explain that those 234,000 phantom jobs are added to the top-line — that is, the total number of jobs in the country.
The 234,000 number goes through a seasonal adjustment formula before it contributes to the headline figure of 288,000. In other words, not all the phantom jobs make it into the total that will have politicians foolishly oohing and aahing and other papers writing misleading headlines.
But the phantom jobs’ effect is so strong in April — and in May and June — that it sharply skews the job figures higher.
So I’ll make my predictions for May and June’s numbers right now: There will be better job growth that the “experts” are predicting and Washington will be beaming.
That joy will end in the summer when the Labor Department pulls back on the birth/death model and phantom jobs slow to a trickle.
Not at all incidentally, the birth/death model has been broken since ♡bamaCare!!! and Dodd-Frank, and is in bad need of revision.
Better yet, just have the Labor Department hand out the raw data, unmassaged, instead of forcing us to read the tea leaves every month. The idea behind seasonal adjustments and the birth/death model is to try and smooth out the peaks and valleys, and to try and accommodate for jobs which might not otherwise be obvious to the data collectors. I’m sure it was all innocuous enough at the time.
But those processes are now either politicized or outdated — or both.