Gallup, which unlike the BLS, does not fudge, Birth/Die, or seasonally adjust its data, has just released its most recent u(n)employment data. And it's not pretty: for all those hoping that the Labor Participation Rate fudge that managed to stun the world a few weeks ago with a major drop in the November jobless rate, don't hold your breath. Gallup which constantly pools 30,000 people on a weekly basis, has found that for the past 4 weeks, both underemployment and unemployment have risen for 4 weeks in a row. And while the number of US workers "working part time and wanting full-time work" one of the traditional short cuts to boosting US jobs has risen to almost a 2 year high, it is the Job Creation Index in December which plunged in the last week, confirming that the Initial Claims data out of the BLS has been spurious and is likely to revert back over 400k on short notice. In summary, here is how Gallup debunks the BLS' propganda: "The sharp drop in the government-reported unemployment rate for November and the sharp drop in jobless claims during the most recent reporting week have combined to create the perception that the job market may be improving. Economists are wondering whether this means the economy is stronger than previously estimated. Political observers are wondering how fast and how far the unemployment rate needs to fall to significantly improve the president's re-election prospects. In contrast, Gallup's data suggest little improvement in the jobs situation. December unemployment is up slightly on an unadjusted basis. In fact, the government is likely to report essentially no change in the unemployment rate when it issues its report on December unemployment in the first week of 2012. Of course, this assumes that the labor force doesn't continue to shrink at so rapid a pace that it drives down the unemployment rate, as it did last month. Gallup's most recent weekly job creation numbers also suggest little improvement in the jobs situation. As a result, it may be wise to exercise caution in interpreting the drop in the government's most recent jobless claims numbers." Or, less diplomatically, the BLS is lying like a drunken sailor just as the economy is about to turn. And if BAC continues languishing under $5, it will turn very hard.
More details, first on broad Underemployment or U-6
Underemployment, a measure that combines the percentage of workers who are unemployed with the percentage working part time but wanting full-time work, is 18.4% in mid-December, as measured by Gallup without seasonal adjustment. This is up slightly from 18.1% at the end of November and similar to the 18.5% of a year ago.
... and then on the far less important broad unemployment rate, or U-3
Unemployment, one of the two components of underemployment, is at 8.7% in mid-December -- up from 8.5% at the end of last month, but down from 9.3% a year ago. Gallup's unemployment measure suggests the government is likely to report essentially no change for December 2011 in its seasonally adjusted unemployment rate, though this is even more difficult than usual to predict at this time of year.
Those working part-time and getting no benefits is getting larger.
The second component of underemployment is the percentage of U.S. employees who are working part time but want full-time work. It is now at 9.7% -- essentially the same as the 9.6% at the end of November. However, the current reading is significantly higher than the 9.2% of mid-December 2010.
Job Creation slides:
Gallup's Job Creation Index for the week ending Dec. 11 is +12, based on 30% of workers nationwide saying their employers are hiring and 18% saying their employers are letting workers go. Just a week earlier, Gallup's Job Creation Index tied its weekly high for the year (+16). Still, Gallup's latest weekly results contrast sharply with the government's recent report that jobless claims fell to a three-year low during the week ending Dec. 10.
Gallup's Job Creation Index and the government's jobless claims report tend to have an inverse relationship and generally tend to align. Although this alignment does not necessarily happen on a weekly basis, it tends to be more erratic around the holidays as seasonal adjustments and processing issues make weekly jobless claims more volatile.
And finally, here is the question: are you going to believe an impartial Gallup, or the BLS whose sole function is to make Obama's reelection chances easier?
Growing Unemployment Optimism May Be Premature
The sharp drop in the government-reported unemployment rate for November and the sharp drop in jobless claims during the most recent reporting week have combined to create the perception that the job market may be improving. Economists are wondering whether this means the economy is stronger than previously estimated. Political observers are wondering how fast and how far the unemployment rate needs to fall to significantly improve the president's re-election prospects.
In contrast, Gallup's data suggest little improvement in the jobs situation. December unemployment is up slightly on an unadjusted basis. In fact, the government is likely to report essentially no change in the unemployment rate when it issues its report on December unemployment in the first week of 2012. Of course, this assumes that the labor force doesn't continue to shrink at so rapid a pace that it drives down the unemployment rate, as it did last month.
Gallup's most recent weekly job creation numbers also suggest little improvement in the jobs situation. As a result, it may be wise to exercise caution in interpreting the drop in the government's most recent jobless claims numbers.
Further, one reason unemployment is often seen as a lagging indicator has to do with the way people enter and leave the workforce. Even if the recent seeming improvement in the job market is more real than Gallup's data imply, signs of a better job market are likely to bring new job seekers into the workforce. The result could be a reversal of last month's drop in the unemployment rate as the workforce increases in size.
In sum, while pleasant thoughts about the job market may be nice for the holidays, caution is clearly warranted -- at least as far as too much job market optimism is concerned -- until the data unfold over the next couple of months.