In Barron’s this week, Alan Abelson laces into BLS on the NFP data:
"We’re talking instead about something much more important, namely, who’ll get the Pulitzer Prize for Fiction. The winner hands down, we
fearlessly forecast, will be that brilliant narrative confected by, of
all people, the Bureau of Labor Statistics, and published just last
Friday under the deceptively bland title "The Employment Situation:
April 2008." Although we’re loath to deprive you of even a modicum of
the thrill of devouring this marvelous work of magic realism by
revealing too much of its contents, rest assured it’s carefully
designed to leave you with a comfy feeling in these rather trying times.
No doubt you’ve already
gleaned the beaming news that instead of the 75,000-80,000 or even
greater job losses and higher unemployment rate that the soothsayers
were prognosticating, payrolls last month were trimmed by a much more
modest 20,000, and the unemployment rate dipped to 5%, from 5.1%.
Hallelujah! It’s such a happy contrast to those nasty expectations and
to the 81,000 jobs that vanished in March.
What makes the report all
the more extraordinary is that it comes in the face of otherwise dismal
dispatches from the employment front. Layoffs last month, according to
Challenger Gray & Christmas, the placement firm, tallied 90,015, a
hefty 68% greater than in March. New claims for unemployment insurance
in the last full week in April rose to 380,000, from 345,000 the week
before, while continuing claims topped the three million mark. Monster,
the online want-ad outfit, reported a 6% drop in its April index
compared with the same month a year ago, and the Conference Board’s
help-wanted index sagged to a new low while its measure of employment
opportunities showed, not surprisingly, jobs are ever-harder to come by.
The BLS report, then, was
like a burst of sunshine dispelling the gloom. So we take this occasion
to tip our hat to the bureau’s artistry in being able to fashion a
comparatively heartening picture of the job market out of some very
unpromising raw material. The populace, as recent soundings make clear,
is plenty uneasy and disgruntled about the stumbling economy, feeling
the pinch and worried about a paycheck; so anything that can provide a
lift to sagging spirits is more than welcome.
Actually, the praise really
belongs to the unknown (at least to us) and certainly unsung
numbers-bender who crafted the so-called birth/death adjustment,
supposedly created to capture the additional jobs of firms too new to
be captured by the survey. As it has demonstrated time and again, it’s
much more a product of the imagination than of dull data, as, of
course, any worthwhile work of fiction is.
We have on occasion pointed
out the contribution the birth/death adjustment has made to the payroll
total, but we have trouble remembering when the additional slots it
conjured up were anywhere near as massive as they were in the April
reckoning, when it "generated" 267,000 jobs. Put another way, ex the
adjustment, last month’s job loss would have ballooned to 287,000. Bit
of a difference, eh?
Just one illustration points
up the, shall we say, peculiarity of what the BLS adjustment has
wrought. According to the birth/death model, 8,000 jobs were added in
April — are you sitting down? — in the financial sector. Which, we
assume, will come as a stunning surprise to the gosh knows how many
poor souls who have been laid off by the banks, the brokerage houses
and the rest of the not-very-robust financial fraternity. Must be
something really wrong with our vision, moreover, since new firms in
that sector appear to be conspicuous by their absence.
As Philippa Dunne and Doug
Henwood, the very bright bulbs who run The Liscio Report, point out —
though they usually view the birth/death model more kindly than we do
— among the stranger additions made via its agency in the April report
was the 45,000 to construction jobs. (In case you’ve been vacationing
on the moon, construction is not exactly booming.)
They also suggest that the
83,000 new slots supposedly created in the leisure and hospitality
field is definitely suspect. "With vacation plans at near-record lows
and restaurants reporting reduced traffic," they feel many of these
supposed job gains could simply disappear come the next benchmark
After reviewing the defects
in the household version of last month’s employment trends, Philippa
and Doug warn, "given all its internal blemishes," it would be wrong to
conclude from the April report that the economy and the job market are
stabilizing. And they caution, "An economy providing lots of part-time
jobs to the young and few full-time jobs to the prime-aged" is an
economy that could have a tough time "sustaining life."
That’s longer than I usually like to excerpt — and we’ve hit on many of the same themes — but it is simply too perfect not to reproduce all of the relevant sections.
Work of Art
Barron’s May 5, 2008
UP AND DOWN WALL STREET