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A Better December Jobs Report? Wait, Revise That

Posted by Larry Doyle on December 7, 2012 9:38 AM |

The unemployment report for the month of November was just released and is better than expected with non-farm payrolls increasing by 146, 000 jobs and the overall unemployment rate dropping to 7.7%. Happy times are here again, right? Wait, revise that.

While many pundits in Washington and on Wall Street are more than welcome to go little further than the headline numbers, let’s go behind the curtain and look a little bit closer. What do we see? Ooh, what’s this on the very last line of the Bureau of Labor Statistics report . . . 

The change in total nonfarm payroll employment for September was revised from +148,000 to +132,000, and the change for October was revised from +171,000 to +138,000.

Back out those 49, 000 jobs from this month’s report and we have a net add of 97,000 jobs for the month that is very much in line with projections. The three month average, post these revisions, is a rank mediocre gain of 138k jobs. God forbid that we allow a negative trend line to develop in the report either.

What else do we learn from this report? Why did the rate decline despite expectations that it would remain steady or perhaps tick up? 350,000 people actually left the labor force bringing the overall labor participation rate down once again to 63.6%. That’s not good folks.

As I have indicated previously, we could have an unemployment rate of 5%, the cheerleaders in Washington popping champagne, and be entering into a deeper recession. How so? If people continue to simply give up looking for work and exit the labor force. Just because these people are not counted when calculating the unemployment rate, does that mean they do not even exist?

For those in Washington in cute skirts shaking pom-poms, these “uncounted” might be an inconvenience to painting a picture of progress. In fact these “uncounted” are an indication of the massive structural problems in our economy.

Unless and until we acknowledge the root problems of why the long term unemployed remains so high and why so many people continue to exit the labor force, we will not craft the appropriate measures to address these  structural issues. Throwing money out the window and pretending it is a safety net would fall under the heading of “putting good money after bad.” Where should we start the discussion? Let’s start by addressing why ~50% of those in our urban schools are dropping out and then we can go from there.

Want to see how your area is doing? Utilize the Research Center at Education Week.

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.


  • Ed


    I was literally just having this conversation with a co-worker of mine. The unemployment rate has ceased to have meaning for me. Its a manipulated statistic that under-informed people are quick to jump on when discussing Obama’s recent “achievements.”

    “In November, 2.5 million persons were marginally attached to the labor force, essentially
    unchanged from a year earlier. (These data are not seasonally adjusted.) These individuals
    were not in the labor force, wanted and were available for work, and had looked for a job
    sometime in the prior 12 months. They were not counted as unemployed because they had not
    searched for work in the 4 weeks preceding the survey.”

    There’s a minor example of unemployed people not counted. And by minor I of course mean MAJOR. 2.5 million people NOT counted? It’s pretty simple to me…if you are of age and able and not working, you are unemployed. Plus, did the BLS call up each one of those 2.5 million people and ask if they had looked for work in the past four weeks because they were about to release November’s jobs data? Of course they didnt.

    I’m not about to jump on the “BLS is fudging numbers train” but they are wrong every month! They might as well have an asterisk at the end of the report saying “*Our numbers are dramatically incorrect every month. Please see the upcoming revision which will be a substantially lower number.”

    Will the truth ever be our governing principle? I’m not so optimistic.

  • Bill

    No telling how many of these people on LT unemployment have cash jobs and have no incentive to get off it, as they make more working less than if they had a job. Friend of mine was telling me just such a story about a guy he fired who is doing that.

    • LD


      Very interesting that you make this comment. Why so? A close friend of mine is an expert in investigating money laundering activities and then providing risk management to the companies impacted by that. What did he tell me? He strongly believes that we will see significant growth in the black market economy here in the US going forward. Why? With greater regulations and likely increase in taxes both individuals and companies have growing incentive to do business under the table.

      I think we would call these the great unintended consequences.

      Navigate accordingly.

  • jim wells

    Curious how much the pre-election job gain figures have been revised, post-election. Perhaps the pundits who questioned the legitimacy of this well-timed “good news” were right.

  • Eddie

    My two q’s about “education” is should it be forced and should government be a provider?

    Well you know my answer but that’s before I hear the 50% drop out rate… So it’s definite no’s!

    Next topic: is the employment number always revised down in subsequent months?

  • Ed

    Am I to understand that Jack Welch was pretty much right on his september/october comments on unemployment based on the information above?

    • LD


      Revisions do happen all the time. In fact there were a few months in which the prior month’s report was revised higher. The three month trend line is the best approach to take when looking at employment reports ALONG with a comparison of the unemployment rate relative to the overall participation rate as was so astutely observed by you (assuming you are the same Ed as first commented on this post).

      This is NOT to say that Mr. Welch was not right.

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