BS from the BLS: Things are a Lot Worse than They are Telling Us
Many Americans simply assume that the government and politicians lie when they are talking about things like cutting taxes, or eliminating waste. But somehow, we tend to believe official government reports about things like economic “growth” or unemployment rates, or even cost-of-living increases.
The truth, sadly, is that the government is lying about these things too.
Take jobs and unemployment. Right after the election, the Obama administration’s Bureau of Labor Statistics proudly trumpeted that the economy had added 151,000 new jobs in October. President Obama, about to head off to India, a land where American jobs go to die, made it sound like maybe the American economy had finally turned a corner. The news led to a jump in the stock market and everyone breathed a sigh of relief, because finally, we had a number that was greater than the 100,000 new jobs that we have been repeatedly told are needed “just to keep pace with the new workers who join the labor force every month.”
Only the number is a fraud. It turns out that this job number is a fictional construct created by BLS statisticians who are using outdated estimates for the number of new small businesses supposedly created every month, and also outdated estimates for the number of small businesses that go bankrupt every month. The reality is that in this deep recession, few new businesses are being started. No surprise there. It takes capital to start a business, and banks aren’t lending these days, especially to risky new start-ups. The reality too is that existing small businesses are folding at a high rate. The pace of bankruptcies of small companies is down from the record 2009 level, but is still extremely high by historical standards.
The real story on employment is told by the BLS’s household survey, which is taken every month and looks at 60,000 randomly selected households. That survey shows that far from the US economy adding jobs, 330,000 jobs were lost in October.
Lying about unemployment has been going on for a long time. It started to get bad back in 1981, when the new Reagan White House got the BLS to change the methodology for calculating the figure. If we used the earlier methodology from 1980 to calculate today’s unemployment rate, which would mean including all those who have taken part-time jobs while looking for full-time work, and those who have given up trying to look because no jobs are available (those currently considered to be “out of the labor force), unemployment today would be 22.5%! That’s more than double the official 9.6% rate.
But it gets worse.
With very little real economic good news to talk about, the government and the Federal Reserve have taken to citing the stock market, which has now returned to pre-economic crisis levels. That should make us feel good, right?
Except that unmentioned is that insiders--the executives of America’s companies, who have to report any trading in their companies’ stock to the Securities & Exchange Commission -- have been selling their holdings at a record pace this year, and especially in the last few months. Bloomberg reports that in October, insiders sold an all-time record of $662 million in shares of their own companies, while buying only $1.6 million of stocks in their companies. That’s a sell:buy ratio of 423:1
Among the largest companies, executives were unloading their company shares at a ratio of 3177:1.