Real Unemployment Rate: GE CEO Jack Welch is Wrong About Jobsgate, Obama Did Not Cook the Numbers
The internet and mainstream media erupted when former General Electric CEO Jack Welch tweeted, “these Chicago guys will do anything … can’t debate so change the numbers,” in a Friday morning post referencing the BLS’s pronouncement unemployment had dropped to 7.8%. Welcome to what the conspiracy wing of America contends could be this generation's Watergate.
Yes, it is remarkable that a month before the presidential election, unemployment rate is now the same as when President Obama took office under 8% for the first time since January of 2009.
Yes, the assumptions in additional jobs attributed in BLS revisions for July and August added significantly to the overall decrease in the unemployment rate.
Yes, the assumptions concerning additional Americans quitting the labor force now totaling 4.3 million since 2009 further brought down the nation’s unemployment rate.
Yes, it is statistically improbable that in an economy which registered 1.9% 1st quarter growth, 1.3% second quarter growth with a guarded view of 1.7% 3rd quarter growth, 800,000 Americans did find jobs – including 560,000 part-time – a record most recently surpassed in 1983 when GDP growth was topping 5%.
But was the September unemployment rate manipulated by the White House akin to the Watergate conspiracy for political purposes, probably not unless you think the White House is smart enough to pick Powerball winners.
That was the assessment of a friend who performs in the private sector similar analysis on America’s unemployment rate as well as predicting and trending GDP growth.
As he told me, “I’m pretty good at what I do but to have fudged the amount of variables necessary to pull the unemployment rate to 7.8% and make it look legitimate would be almost impossible.”
He went on, “secondly, the fact this number was based on a mathematically as opposed to statistically impossible Household Survey figure of 800,000 new jobs obtained proves this wasn’t a conspiracy. Nobody is that naïve.” For those who do not understand his reference, let me explain.
To the people who compute our nation’s unemployment numbers, they know from the employer’s survey, there were not 800,000 jobs particularly part-time that could have been filled. Conversely, it is statistically possible although improbable to survey households – 25% which change month to month – and develop a new employment number which when extrapolated across the total available labor force would net 800,000 jobs being secured in September.
No matter how unlikely that survey might have been, it is at least statistically possible.
Now conspiracy theorists will say, the White House is famous for fudging numbers such as when they were originally trying to report jobs growth per Congressional district only to have those investigated independently and questioned.
Point granted but it is one thing to report job growth in districts that don’t actually exist from a data base error or overstate jobs gained from poor surveying response, BLS isn’t the White House.
What none of the conspiracy wing has found a way to spin is the bad news the BLS presented. There was basically no increase in labor-force participation. 560,000 of the reported new jobs secured were part-time.
In the world of Big Money, the BLS report was viewed as anticipated with America’s Equity markets finishing mixed on Friday.
So was the BLS September Report orchestrated by the White House for political gain, as was Watergate, I think not.
I don’t give the White House high marks for there handling of the economy, but I can’t believe they are naïve enough to have attempted to manipulate September’s BLS in this manner.