Was Today's Jobs Report Inflated With Phony Numbers?

For those of you not familiar with the vast pitfalls of economic data reporting there is something that you ought to know - many of the numbers that get reported by our statistical agencies are a mixture of counting and guessing.  The guessing is highly educated guessing, which goes by the term of art "modeling" but it is guessing nonetheless because it is not actually counting of things that can be counted.  Many of these guessing techniques are not outright controversial, but they do add a tinge of phoniness to certain reported numbers relative to others.  My favorite phony factor is something that goes into CPI inflation called "Owners Equivalent Rent" which is why I (and others) don't really believe in reported CPI.

Another famous guessing factor relates to the very jobs numbers we got today.  It's called the "birth-death model" and it tries to figure out how many jobs were created by brand new businesses that can't be counted and it nets this out with jobs lost by failed businesses that also can't be counted.  Well, Bryan Preston catches something that I didn't catch...oops.

CNBC drilled down into the June jobs numbers from the Bureau of Labor Statistics. Here is the shocking truth about the figure of 80,000 jobs supposedly created.

The birth-death model, which approximates the amount of jobs gained through new businesses created too recently to be counted in the formal survey, added 124,000 positions, meaning that without the estimation the total count would have been a loss of 44,000.

Watch for the July jobs report period in a few weeks. That’s when we’re likely to see that June’s numbers get revised down, as has been the trend during the Obama era. June may get revised into negative job growth.

So, that already not so great jobs report looks alot more shaky than at first blush. Look for the MSM to bury the revision.