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Unemployment Rate Drops, Conspiracy Theories Rise, Economy Improves

By on February 6th, 2012





The second part of the BLS statement, “… and the unemployment rate decreased to 8.3 percent…” comes from the household survey. This is one of the best-run research surveys in the world, actually, and it is the survey used to calculate the unemployment rate. One of the problems with the BLS releases is that they report the changes in payrolls and the unemployment rate together, leading most people to believe that they are derived from exactly the same data. They are not.


So what happened? It was really clear in the BLS release, and as mentioned, everyone knew this was going to happen, but no one knew what the final extent of things would be. Their release stated: “…household survey data for January 2012 reflect updated population estimates…” Later in the release, it explains that those population estimates were based on new data from the 2010 Census that identified an undercount of about 1.5 million people compared to the Census of 2000. That is, the Census Bureau had been underestimating population by about 150,000 people per year for each of the last ten years.

So, just to use round numbers, let’s say the US population is 300 million today (it’s higher than that), and then say that the undercount is 1.5 million (it’s slightly higher). How “bad” has the Census estimate been? Over ten years, the Census miscounted by 0.5%. Half a percentage point… the problem is they supplied the adjustment all at once, and in a political year.



This meant that all along the BLS was undercounting both the number of jobs holders and undercounting the number of people not working at the same time. (But it was the Census Bureau’s fault, if you count being off by 0.5% as being a statistical felony, and the BLS is as pure as the driven snow; besides that, they warned us).








Proprietors’ income, a measure of the health of small business, was up +0.2% on an annualized basis compared to the third quarter, and is +2.4% higher than the start of the recession. Unfortunately, inflation has eroded those gains, and then some. Proprietors’ income is below the December 2007 level on an inflation-adjusted basis by -4.7%.

  1. 3 Responses to “Unemployment Rate Drops, Conspiracy Theories Rise, Economy Improves”

  2. By Joey on Feb 9, 2012 | Reply

    Interesting how conspiracy theories emerge when the statistics show trends not in the favor of certain interests who would be more than happy to see our economy in a double-dip recession for the next 8 months.

    Instead of comparing the unemployment rate at a certain fixed date (e.g. January 2008 ), why not compare the unemployment rate trend from January 2008? Heck, even compare the underployment trend the same way? Is this not more meaningful?

  3. By Del Scottti on Feb 29, 2012 | Reply

    hard to find data on printing industry. no one is showing how many workers are displaced. they say employment conditions for press operators is “favorable”. i Have been out of work for 3 years. everyone i know in the business knows there are no jobs available. no one wants to admit the truth.why the coverup? if you search the web for data they show you 1997 or 2003 or they only show you projections, which all point downward.

  4. By Dr. Joe Webb on Feb 29, 2012 | Reply

    I assume you are talking about the Occupational Outlook data from the Bureau of Labor Statistics. Those are good data to avoid. It’s not a cover-up. It’s a flawed methodology that reacts to industry changes long after they actually happen. Unfortunately, high school guidance counselors and others treat the data as gospel.