Will The Real Unemployment Rate Please Step Forward?

If you tell a lie big enough and keep repeating it, people will eventually come to believe it. - Joseph Goebbels, Hitler's Minister of Propaganda

Last Friday's non-farm payroll report and the supposed decline in the reported unemployment rate to 7.8% stirred up quite a debate in media over whether or not the number was artificially manipulated lower for Obama's political benefit.  I have detailed extensively in previous posts, with plenty of data to back it up, the assertion that the employment report is heavily manipulated.  Much of it comes directly from the BLS website.  What I found quite strikingly obvious is that not one media outlet defending the report - Bloomberg, CNN, MSNBC, CNBC, Fox News - ever presented any data to back-up their defense.  It's kind of like Obama and Romney tossing out their "programs" to solve our problems without ever detailing how they'll accomplish their platitudinous political promises.

To summarize the situation regarding whether or not the BLS manipulates its economic data, here's a quote from John Williams' Shadow Statistics report.  John Williams has been tracking and analyzing Government economic statistics for several decades.  I doubt there's anyone outside of the BLS brain trust who knows more about how and where the numbers are manipulated:

The August-to-September change in the headline unemployment rate almost certainly was not a 0.3% decline.  The Bureau of Labor Statistics (BLS) knows the reported change in unemployment was wrong—other than by extreme coincidence—and it knows what consistent reporting actually showed.  Only politics prevents the BLS from releasing the correct number, whether the unemployment rate actually declined, held even, or rose as predicted by consensus forecasters.  The lack of transparency here in the data preparation allows for direct political manipulation.

If you are interested in his detailed analysis, you can subscribe to his reports HERE  If you have never read his work but are curious about the truth, it's worth subscribing.

As always, the golden truth lies in "following the money."  While common sense, combined with Williams' excruciating analysis of the data, suggests the headline-reported unemployment is total bullshit, the pay-off is always about money.  Show me the money!  It just so happens that Bill King, who publishes his daily "The King Report," presented a dollars and sense analysis which confirms that the unemployment report was fictitious, a Goebbelian lie.

Because The King Report is also a subscription service, I will provide a summary of his "follow the money" findings.  Mr. King did the logical thing and looked at payroll tax receipts for September and compared them to August.  One would expect that if the economy generated the number of jobs claimed in the September employment report, the Treasury would have collected more payroll tax receipts, right?  It turns out that the payroll tax receipts for September declined by $2.2 billion.  How can that be?

He also looks at year-to-date FICA witholdings (Social Security tax).  Presumably, if the economy has generated the number jobs this year, as claimed by the Government, we would expect an increase in FICA witholdings for 2012 vs. 2011.  As it turns out, FICA witholdings through the end of August 2012 are $7.2 billion lower than for the same period in 2011.  Could Steve Liesman on CNBC please explain that one?

Finally, and this one is my favorite, Mr. King puts the nefarious Birth/Death model assumption to the test of money.  For the September employment report, the Government number includes the addition of 546,000 new jobs from the formation of new businesses.  These would be you mom and pop small local businesses.  To test that, we would expect to see a large increase in "self-employment taxes" per the Self-Employment Contributions and Federal Disability Tax Acts.  As it turns out, self-emploment tax contributions year to date are lower in 2012 than for 2011. If you are interested in looking at the Treasury data Mr. King analyzed, the link is here:  LINK
 
One more point, consumer spending slowed down considerably in September.  Wouldn't it seem logical if the economy were producing a large number of jobs that, on a macro level, consumer spending should be increasing along with what should be a larger "pool" of personal income?

There is no question in my mind that the Government egregiously manipulates the major economic reports for political purposes.  I have been reading and researching this for over 10 years now.  As I stated before, the analysts who report the manipulation back everything up with extensive and detailed analysis.  Those who report and defend the Government back up their claim with empty rhetoric.  I'll leave it to you to further investigate and decide if the Government is lying or if the analysts who back up "manipulation" assertions with actual proof - statistical and monetary - are black helicopter conspiracy theorists, as they've been called by Bloomberg and others in the media.