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May 4, 2012: Unemployment Report Review

Posted by Larry Doyle on May 4, 2012 9:20 AM |

When it comes to discussing the unemployment rate in our nation today, I am often reminded of a discussion we would facetiously have on the trading desk at First Boston back in the mid-1980s.  

That discussion would revolve around our desk manager inquiring as to our weekly P and L (profit and loss). I can recall these humorous exchanges as if they were yesterday:

Manager: “So, LD, what’s your P and L this week? ”

LD: “Well, what do you need?” 

Manager: “Let’s see, if you were up **pick any number**, then we’d make our target number this week.”

LD: “Well, guess what? That’s exactly what we made this week . . . hahaha!”

After this humorous exchange, we would settle into a serious discussion as to what the real numbers were. Regrettably, in our nation today, I envision our focus on the monthly employment report parallels all too closely the humorous exchange as to our desk’s P and L.

What does the administration in Washington “need” the unemployment rate to be by election day? A number with a 7 handle is the target and palatable in terms of gaining re-election. But what are the real unemployment numbers?

Given that a picture paints a thousand words, and in order to give credit where it is due, thanks to the widely read Zero Hedge we learn People Not in Labor Force Soar by 522,000, Labor Force Participation Rate Lowest Since 1981:

In April the number of people not in the labor force rose by a whopping 522,000 from87,897,000 to 88,419,000.  This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.


These numbers — and the necessary discussion revolving around them — are not humorous. That said, this very serious discussion MUST take place if we are to have a degree of integrity in our national political debate. Regrettably, integrity and political are all too often mutually exclusive terms in America circa 2012.

Navigate accordingly.

Larry Doyle 

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • fred

    Oh no, another dirty little secret of gov’t reports exposed. (Don’t look now but the markets are expressing their displeasure also).

    I love LT charts. The LT labor participation chart clearly indicates that the uptrend has ended and a downtrend has developed. With the baby boomers now at or approaching retirement I see no way that the participation rate trend is going to change anytime soon.

    Unless the gov’t changes the way the unemployment rate is calculated it wont be long before it even has a shot at going negative!

    LD, since so much rides on gov’t reports, shouldn’t statistical methodolgy be reviewed periodically by an expert bi-partisan panel to determine ‘real world’ accuracy and usefulness?

    • LD


      In fact, there should be expert bi-partisan panels . . . BUT those may actually bring about a degree of transparency and the truth — and Uncle Sam has little real interest in either or both of those currently, so why would he want to do that?

      • fred

        oh I don’t know….just a guess, but maybe to regain the respect and trust of ‘we the people’, whom OUR GOVERNMENT is suppose to serve.

  • LD

    “We the People” are going to have to do this …

    ON OUR OWN!!

  • fred


    I hope you got to see the CNBC Rick Santelli Fri 11:15 am ‘whiteboard’ TV clip, it was a classic!

    It sure seems today’s market is trying, real hard, to spoil Obama’s victory lap this weekend! Damn, where’s that Plunge Protection team when you need them? Maybe they need volume to dry up before they can fix things.

  • Obsvr-1

    The government may want … scratch that

    The government corrupts its own data to meet political objectives, THEY are the biggest liars from the “Figures don’t lie, liars figure” statement.

    People (consumers) should demand more objective reporting from the MSM, at the very least the periodic reports should include the Headline Unemployment Rate, U6 Rate and Labor Participation Levels — that way people can make their own (and more objective) determination of the Employment situation.

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