Why You Can’t Trust the Numbers

There is a point of analysis that goes typically unmentioned. Since 1980 there is a statistical analysis that compares Reported unemployment to Implied unemployment. Implied unemployment considers a broader range of the unemployed including those that have ‘dropped out’ of the labor force.

There is a gap between Reported and Implied unemployment as you would expect. However, analysis of the trends over time shows that current unemployment reporting is likely false and the statistical analysis that produces it is fatally flawed……………..or manipulated .

Since 1980 the trend lines between Reported and Implied are consistent. The degree of gap varies but the major trend lines are consistent to each other, the two points of analysis always follow the same general trending moving up and down consistent to each other; until mid 2009.

It is at that point that the 30 year trend shows a major departure from trend line consistency. Since 1988 the Implied unemployment rate is consistently below the actual unemployment rate. In 2009 that trend reverses with the implied unemployment rate being significantly higher than the unemployment rate reported by the Bureau of Labor statistics.

In the early 80’s a similar situation existed related to high unemployment where the Implied unemployment rate was higher than the Reported rate, however, the general trending was consistent until the crossover point occurred based on an improving economy.

Not so now and not so since 2009. The trend lines for the two points of analysis have diverged and for the first time the trend lines occur in complete opposition to each other, meaning that as the Reported rate declines, Implied unemployment moves in exactly the opposite direction. The degree to which the gap occurs is also the most significant it has been since 1980.

Reported unemployment is at 8%, Implied unemployment is nearly 12%. That gap represents a 50% margin of error related to Reported unemployment. The gaps have been moving in opposition to each other consistently and for the first time. The gap has enlarged consistently since 2009.

This is, self admittedly, more than a little bit geeky but if jobs and the economy are the major issues this is a major point of contention and leads to questions of validity. Did the basis for the statistical reporting change? What justifies the dramatic change in a consistent 30 year trend? Are the numbers being ‘cooked’? Have the numbers been politicized?

What is clear is that something changed! See the charting at the link below.