More Ugly Truth About Jobless Claims

Last week, the US Bureau of Labor Statistics released its May jobs report.? It was another unexpectedly spectacular gain.? Considering the BLS April report posted an eye-popping 272K gains in payrolls (50% higher than market expectations), the BLS may have finally jumped the shark.?

While the BLS headline suggests that payroll gains were stellar, unemployment also increased from 3.9% to 4.0%.? If this seems paradoxical to you, you're not alone!? Apparently, the BLS does not account for workers who are working multiple jobs.? In fact, the BLS counts multiple jobs held by the same worker.

This accounting manipulation is further illustrated by the divergence between the BLS jobs report and corresponding household survey data.? Bloomberg’s chief economist, Anna Wong, suggested that the BLS data is ignoring the reality of surging business closures and falling business formations. ?Wong thinks the underlying pace of current job gains is less than 100,000 per month.

Another accounting sleight of hand by the BLS Involves monthly Birth/ Death adjustments.?According to Zerohedge, the BLS birth-death model added 1.9 million jobs since last April.?This suggests that more than 50% of all published job gains came from a BLS spreadsheet that simply assumes, based on historic precedent, that 1.9 million new jobs were created.

Additionally, back in May 2023 the BLS published data indicating the US had 134.4 million full-time jobs.? That was a million jobs more than it has today. ?According to recent BLS data, job growth since May 2023 has been in the part-time category.? In summary, 1.2 million full-time jobs appear to have been replaced by 1.5 million part time jobs during the last year!

Finally, it’s worth noting that the number of native-born US workers decreased by 663K in the May jobs report while the number of foreign-born workers increased by 414K.? The pattern was quite pronounced during the past year when native-born workers lost 668K jobs while foreign-born workers gained 934K jobs.

As we enter the election season, this hot potato is sure to get hotter. If a recession hits hard after the election, there will be millions of unemployed Americans seeking an explanation for what happened. ?Between now and November, you can expect the administration to continue publishing exceedingly rosy jobs reports that beggar disbelief so I won't be making any big financial decisions based on the government's published numbers.