King Report: Why I Don’t Believe the Household Survey



The Friday afternoon equity rally occurred on hope that the EU might figure out a way to bailout Greece and anticipation of another Manic Monday rally.

No Greece bailout has appeared, only the hollow G7 vow to continue applying whatever stimulus that still exists…Today – Only the hope of a Monday Mania rally remains for bulls. But the Nikkei is down 1%; so in Sunday night trading SPHs are down 0.20. 1050 on the S&P remains a key level.

There is little if anything for governments and central banks to do at this point. So solons are trying to euchre the markets with verbal intervention.

Bailing out PIGS is not the major issue. If the EU does a bailout, it will only be a temporary aid because socialism is collapsing on a global basis due to the enormous, unserviceable debt.

Countries accustomed to the undeserved goodies that socialism promised but delivered on borrowed money do not have the political will to cut the unaffordable spending. So in the near future, the market will force the requisite changes.

At some point the borrowed money train will halt and the goodies will disappear, just like in the USSR.

Reuters: Greece sticks to austerity plan: finance minister Greece will stick to its deficit-cutting plan and the first three months of the year will be crucial for regaining investors and EU confidence, the country’s finance minister said in an interview on Sunday.

Reuters: The euro zone’s top finance officials sought on Saturday to ease concerns about a deep budget crisis that has roiled financial markets and raised questions about the future of the single currency group. After a two-day meeting of finance ministers and central bankers from the G7 industrialized nations, European Central Bank President Jean-Claude Trichet said he was confident that Greece, which has been hit by the budget deficit crisis, would meet tough new belt-tightening targets.

Reuters: G7 focuses on Europe debt “We talked about Greece, Portugal and Spain and we told our partners we had to solve the problem ourselves without the help of the IMF,” Eurogroup chair Jean-Claude Juncker told Reuters on Saturday, the second day of a meeting of finance leaders from the Group
of Seven rich industrialized nations. Euro zone countries like Greece, Spain and Portugal are under increasing pressure to bring spending under control.

The Telegraph: Gordon Brown to attend crisis talks over Greece Gordon Brown will attend crisis talks in Brussels this week as the eurozone faces a crisis over the spiraling debt Greece and other countries have built up. The Prime Minister will preach a “tough love” message for Greece and along
with the other major leaders will urge the country to slash its spending over the next three years.

They will be presented with an agreed plan which will demand that the deficit has to be cut from 13 per cent to 2 per cent by 2013…

Over the past year we have recounted numerous times that there has been no restructuring of the US economy or Europe for that matter. All that has been done is that sovereigns have absorbed trillions of dollars in private sector debt and crappy paper and issued trillions of dollars of debt to support more
stimuli and crappy paper absorption.

If we have entered a new crisis phase in which sovereign nations have to bailout out other sovereign by issuing more debt, the final crisis stage will occur when the market revolts against the debt of the nations that bailed out other sovereigns. This is checkmate.

The usual suspects trumpeted the better than expected House Survey in the January Employment Report. However, we found an anomaly in the survey that suggests a sloppy book-cooking gambit.

The Household Survey shows an increase of 541k jobs and a gain of 111k in the pool of available workers. This produced the decline to 9.7% in the politically sensitive unemployment rate…Part-time workers increased 252k, which is more than half of the 541k gain.

Here’s what makes the Household Survey job gain very suspicious. The entire gain is attributed to one category, ‘Women, 20 years and over’, which increased 529k…’Men, 20+’ declined 1k!


How is it possible that so many women were hired and men lost 1k jobs?!?! This is highly improbable! Moreover, NSA Women, 20+ only increased 7k. NSA Men, 20+ declined 914k! [Table below]. And the civilian noninstitutional population of ‘Women, 20 years and over’, declined by 36k!

‘Self-employed’ declined 128k; so women weren’t starting businesses.

Teenage male jobs (16+) increased 18k. Teenage women jobs declined 5k…“White Women” accounted for 495k of the 529k gain. White men are +31k.

The Household Survey increase in jobs is NOT supported by withheld taxes, which show a 7.2% decline for January. Tax data measure real money going into workers’ hands.

From our Wednesday, February 3, 2010 report: The US Treasury reports withheld taxes of $140.381B for Jan 2010; FYTD is $547.710B. For January 2009 withheld taxes are $151.285B; FYTD is $597.593B. Jan 2010 withheld taxes are down 7.2% y/y; FYTD is down 8.35%…January NFP should continue to
show job losses. But it could be crafted to show unrealistic strength like the ridiculous Q4 GDP of 5.7%, or seasonally adjusted employment surveys.

The Household Survey’s highly improbable increase in only female employment suggests faulty methodology (malfeasance), some unqualified adjustment or a clumsy attempt to craft a better employment report for political expediency (fraud). The reasonable conclusion is the Household Survey job gain in January is bogus.

It’s a good time to review what constitutes a ‘job’ in the BLS’s Household Survey. The BLS: Household survey. The sample is selected to reflect the entire
civilian noninstitutional population. Based on responses to a series of questions on work and job search activities, each person 16 years and over in a sample household is classified as employed, unemployed, or not in the labor force.

People are classified as employed if they did any work at all as paid employees during the reference week; worked in their own business, profession, or on their own farm; or worked without pay at least 15 hours in a family business or farm. People are also counted as employed if they were temporarily absent from their jobs because of illness, bad weather, vacation, labor-management disputes, or personal reasons.

Please note the in the Household Survey people are counted as employed even if they received no income or had sustained absences from work. You can imagine what ‘personal reasons’ does to the data.

One last concern about the Household Survey in January Employment Report, from the lips of the BLS: Also, household survey data for January 2010 reflect updated population estimates…The change in population reflected in the new estimates results primarily from adjustments for net international
migration, updated vital statistics and other information, and some methodological changes in the estimation process.

The BLS claims that the ‘population control’ adjustment reduced the Household Survey by 243k. This means that without the new adjustment 784k jobs would’ve appeared. If 529k job growth is dubious by tax data, January job growth of 784k would be side-splitting.

But if you take the BLS at its word on the new ‘population control’ adjustment, which is due to new Census Bureau data, then Household job growth is substantial small in previous months.

The BLS admits that December 2009 Household jobs have to be lowered by 243k…Ya think the BLS is doing this to confuse or frustrate people?

Carl Bialik in a WSJ blog gives another reason to question the Household Survey: My print column this week examines a quirk in U.S. Census Bureau data that may have led to research errors. A National Bureau of Economic Research working paper this week demonstrated that so-called microdata — a
subset of all Census responses, released to researchers who want to dig deeper into demographic trends — for several surveys contained flaws…

But other polling researchers expressed concern. “In at least some cases, the conclusions that have been drawn from the surveys that were incorrectly adjusted will have been wrong,” said Paul Lavrakas, a survey consultant and former chief research methodologist for Nielsen Media Research. “Thus, it is critical for surveys researchers that the U.S. Census Bureau generate and release data that is beyond reproach.”

Several researchers saw the revelations as a reminder that all survey data are flawed in one way or another, representing as they do an imperfect window into shifting public opinion and behavior. “All demographic and economic data are error-ridden,” said Gary V. Engelhardt, an economist at Syracuse
University. “… You can’t get around that, and that shouldn’t be surprising. And anyone who has thought an ounce about how the data they are using are collected shouldn’t be surprised that sometimes those
errors are large.”…

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