Saturday, December 5, 2009

Non-Farm Payroll Fairy Tales

The TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November.  This is in extreme contrast with the Government's Bureau of Labor Statistics report which showed a loss of only 11,000 jobs in November.  Here's the article link from  BLS is full of BS

ADP, the global business outsourcing firm which, among other functions, provides payroll services to 400,000 U.S. companies representing 24 million employees, had estimated on Wednesday that 169,000 jobs were lost in November.

I would suggest that, given what we know about the manipulation of Government statistics, that the TrimTabs and ADP estimates of the employment situation are much more reliable than the Government estimates.  TrimTabs and ADP make a living selling accurate, unbiased economic data to the investment management industry.  If their data sucks they don't get paid.  The Obama administration, on the other hand - especially at this point in time - is completely incentivized to produce a fairy tale which shows that the employment situation is improving.

Make no mistake about it, as a professional speculator I would bet a lot of money on the relative accuracy of the TrimTabs/ADP reports over the Goverment report.  Apparently the stock market agrees with my assessment of the situation.  After the initial knee-jerk, idiot-driven spike in the Dow after the market opened, the Dow ended up closing 121 points, or 1.2%, below its initial high of the day.  At one point the Dow was quite negative for the day.

Here's a modest proposal for Obama to reduce the unemployment rate:  why not just stop extending unemployment benefits?  That way, as people fall off the unemployment payroll and stop looking for jobs that don't exist (except in the fantasies of the Government authors of the birth-death model fairy tale), they officially drop out of the labor force headcount and will thereby reduce the computed rate of unemployment.

**NOTE: this is John Williams' (author of assessment of the Government's employment calculations:  
Just in time to boost the confidence of Holiday Season shoppers, the Bureau of Labor Statistics (BLS) announced a 0.2% downturn in the November Unemployment rate, with November payroll employment virtually unchanged. Those results are nonsense, if taken literally...There are serious flaws evident in the payroll employment survey, ranging from the inability of the birth-death model to handle a recession, to the use of a concurrent seasonal factor adjustment, which allows outright gaming of the numbers, should someone choose to do so. The short-term reporting of payroll data is misleading — virtually worthless — at the moment.


  1. Dave,
    The ADP-BLS disconnect is a big one and yet I did not hear one thing about it Friday. Srange indeed. Plenty of "gold going to $0" talk already this weekend. If gold and silver go to $0 I am going to buy at all! I may need a bigger backdoor shed though.

  2. LOL. I'm not going to hedge out the bullion in my fund and go to 100% cash on the stock side of the fund until I hear no one talking about gold going to zero, I see the big coin dealers with product coming out of their ears and no premiums to spot and the gold/silver ratio closer to 45-50. And at that point I expect maybe a 15-20% price correction in gold and 12 month consolidation.

  3. Dave do u think the usd carry trade is being blown out of proportion? All I hear is talk but no numbers to back up exactly how much usd is being borrowed to fund this ponzi game. Another thing, I think this recent usd decline has very little to do with speculators and alot more to do with the abysmal fiscal and monetary policy (low rate, qe, big g. spending, etc). And usd holders around the world are actively diversifying out the debased currency.

  4. Dave,
    told you the Broncos would roll. They sure as hell look betetr than the Patriots!

  5. I was nervous because of the Broncos dismal December record in KC. After the first quarter, I was shocked at how terrible the Chiefs are. That's a broken team. Be funny if Shanahan ended up coaching there.

    Pats are on the downside of a great run. They need to rebuild. Maybe that's why The Hoodie let Seymour and some of the the older vets go. Beli looks burned out. That's how Shanahan got. Questionable coaching and personnel decisions and then the boot LOL.

    How about those Raid-uhs?

  6. Dave,
    had the same coversation about the Pats tonight with the wife; she asked me "what to the Pats need to get better?" and after about 5 items I realized they are in a rebuild mode. Nasty.

  7. The Patriots have a number of problems, the coach, the QB, and the offensive coordinator to name a few. They are collapsing and their season is effectively over regardless of whether they make the playoffs.

    Belichick looks old and tired, despite-or maybe (in part) because of- the dye job. Brady made one of the worst throws he's probably made in years in the Miami end zone. Who would have thought that the high water mark for this team would be winning the '07 AFC Championship.

    If you need a team to cheer for in Boston better root for the Cs.

  8. @Edwardo: I think Belichick is burned out in NE and needs to take a year off. I think Brady still has a few good years left and if they can surround him with a better RB, TE and a WR to compliment Welker, they can improve on this season. Randy Moss is farting dust.

    They need to plug some holes on defense as well. Belichick should take a few weeks off after this season an recharge his batteries. He's a great coach but burned out.

  9. The Chick may be burned out, but it's hard to imagine him taking a year off, he's addicted to football, or so it seems. In any case, who takes a sabbatical in the N.F.L. for one year and comes back to the same team?

    Totally agree on Moss, he is a shadow of his former self, much like the Pats themselves.