The X-12 Factor

In Article 32 of this Volume, Dr. Paul Craig Roberts expressed his displeasure at the way the Bureau of Labor Statistics presented the unemployment numbers to American readers. And he wasn’t the only one who zeroed in on the government’s propaganda. Here’s what was posted in OpEdNews yesterday. It’s the whole skinny on the spinnage put out by the government every month – just to keep the dumbed down populace in line.

“According to a report released yesterday by the Bureau of Labor Statistics (BLS), there were approximately 146,000 jobs added in the U.S. in November and the unemployment rate dropped to 7.7 percent, which would be the lowest since 2008. The report is based on a survey of households and employers, and does not accurately depict the reality of the jobless rate in the U.S. today.

“The 7.7 percent rate is the government’s most widely publicized unemployment rate, known as the U-3, which takes into account only those who are collecting unemployment benefits and actively looking for work. It does not take into account those whose unemployment benefits have run out, those who have given up seeking work, those who are underemployed – desiring full time work but forced to work part time, or those who have dropped out of the labor force more than 12 months ago.

“There is also a factor in the calculations known as ‘seasonal adjustments.’ The BLS uses a software program known as X-12 ARIMA, a complex modeling algorithm, to factor in seasonal adjustments to the jobs reports. As with any software program, the results are only as good as what the data input is and the results are easily manipulated. Job growth reports from the BLS have a 100,000 jobs margin of error on a monthly basis, but outside of that margin they are 90 percent accurate.

“In fact, the numbers in the reports are regularly (and quietly) revised each month. Last month’s jobs report suggested that the economy had added 148,000 jobs in September and 171,000 jobs in October. That has now been revised downward to 132,000 and 138,000, respectively.

“According to the BLS report, 53,000 of the 146,000 jobs added in November were in the retail sector. That would obviously factor in as a seasonal adjustment, because most of those jobs will disappear after the holiday season. Combining that with the potential for a 100,000 job margin of error could mean job losses and a rise in the real unemployment rate last month. It is also difficult to factor in anomalies like the amount of people temporarily out of work due to Hurricane Sandy during the survey week, although the BLS reported that the effects were minimal.

“Brad Plumer, writing for the Washington Post, explains the potential for discrepancy: ‘The discrepancy has to do with what’s known as seasonal adjustments. The U.S. economy follows certain predictable patterns in hiring and layoffs every year. School districts always let workers go for the summer and hire in the fall. Retailers always staff up for the Christmas holidays and lay people off afterwards. Students always flood the labor market in June. And ths is exactly BLS does in its monthly jobs reports.’

“The BLS report releases the highly publicized U-3 unemployment rate along with a lesser known rate called the U-6. There are, in fact, six different scales of unemployment known as ‘alternative measures of labor underutilization,’ that are numbered U-1 through U-6. The U-6 rate is the most inclusive gauge of the statistical unemployment rate in the U.S. because it takes into account total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force.

“Another BLS report shows, for example, that the official U-6 unemployment rate for the state of Wisconsin is 13 percent. Nevada’s U-6 rate is 21.4 percent, up from just 7.6 percent in 2007. Washington State is at 17.1 percent. Economically troubled California has a 19.6 percent real rate, while Rhode Island is at 18.3 percent, more than double its 8.3 percent rate in 2007. Only four states, Nebraska, North Dakota, South Dakota and Oklahoma have a rate that is under 10 percent.

“Indeed, many have already pointed out that the lower unemployment rate has more to do with people dropping off the unemployment rolls and out of the labor force than with job creation, as evidenced by a reduction in the numbers reported in the labor force. Even the U-6 rate, however, does not accurately measure the true amount of eligible workers who are out of work.

“The key words in that report are ‘marginally attached.’ Persons marginally attached to the labor force are described as those who currently are neither working nor looking for work but indicate that they want to work, are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work.

“Many Americans have given up on the job market and have not looked for work in the past 12 months. Many do not have a phone or mailing address through which to respond to a household survey. There is no way to count all the of the unemployed in America who are no longer ‘marginally attached’ to the labor force and according to some estimates that number is staggering.

“These people have been called by CNN ‘The 86 million invisible unemployed and that, taken together with some simple math, shows that the true jobless rate in the U.S. is far higher than 7.7 percent.

“The total U.S. population is approximately 330 million. 24 percent of those, however, are young people not eligible to work and 13 percent are retired. So the total pool of available workers in the United States is 100% – (24% + 13%) = 63% of 330 million, or about 208 million workers. The U.S. government officially admits that 7.7 percent of the labor force is ‘visibly’ unemployed, which accounts for about 16 million people. Together with the ‘invisible’ that means about 102 million Americans are available to work but do not have a full time job. And with 102 million out of 208 million available workers not working, the true jobless rate in the U.S. right now is closer to 49 percent, not the 7.7 percent the U.S. government and corporate media is propagandizing about. That calculation is consistent with a recent ‘survey of income and program participation (SIPP)’ conducted by the U.S. Census Bureau that shows that well over 100 million Americans are enrolled in at least one welfare program run by the federal government. And that figure does not even include Social Security or Medicare.

“The implications for the U.S. economy should be obvious. Government benefits for the unemployed merely provide enough for families to get by and cover basic living expenses. They leave no room for the type of discretionary spending that keeps businesses thriving in America. The amount of citizens out of work, not contributing revenue and receiving benefits, combined with billions in defense and war spending, bank bailouts, tax breaks for huge corporations that outsource jobs, etc., is simply unsustainable.

“The only solution to the economic downturn in the U.S. is to bring back or create well-paying jobs in the U.S. Even though seasonal retail jobs that pay less than $ 10 per hour make good headlines in reports, they are not the solution.” –

The above supports what we’ve been stating for the last half dozen years or so. U.S. unemployment is the cause of the world’s economic downturn, and the following is one of the most obvious effect of this worldwide economic collapse.

“Idle Boxship Capacity Up”, is how the report began, and it went on to say:

“The global idle containership fleet has climbed to 820,000 TEUs for a total of 288 ships as of December 3, according to Alphaliner data, which marked an increase of 52,000 TEUs compared to a fortnight ago.

“The increase was blamed mainly on the scrapping of a number of Asia-Europe strings over the slack winter season, with 33 units of above 5,000 TEUs recorded as unemployed. These ships excluded the ships immobilised for planned general repairs.

“The report highlighted that despite idle capacity increases since mid-June, freight rates had continued to weaken over the same period. Spot rates from China have dropped to their lowest levels since February.

“Spot rates on the Asia-North Europe trade lane declined to below $ 1,000 per TEU for the first time in 10 months, with weak vessel utilisation levels forcing ocean liners to cut rates on the back of a thwarted attempt to implement a mid-December rate increase of $ 500 per TEU.

” ‘The chance of securing a sustainable rate increase on this corridor now appears to be increasingly slim, with any rate hike likely to be short-lived unless more capacity is withdrawn,’ the report said.
– Source: Exim News Service – Paris, Dec. 13″. –

We don’t care about jobs, though. Solving our unemployment woes and the resulting world’s economic crisis would throw a monkey wrench into the war plans being carried out by the partnership forged between our elected leaders and the military-industrial complex.

That estimated 49 percent, by the way – does that sound familiar? Isn’t that pretty close to what we’ve estimated in earlier commentaries? And how could this group of incompetent pols in Washington ever create the 102 million new jobs so desperately needed by unemployed Americans? They couldn’t – unless they initiate a larger-than-life FDR-type Emergency Shipbuilding Program.