Real numbers

Unemployment – Real Time Tax Data Reveals Realistic Figures


To add to the previous post discussing the unemployment situation one thing that is important to add here is the discrepancy between the Government's reported job loss figures and the real time analysis of job losses by observing the daily tax data all across the nation.
In early 2008 I provided my first estimate of where the unemployment situation would end up and it was a projection worse than the Governments own projections. Throughout the financial crisis when I issued a new unemployment projection my numbers have thus far always proven to be correct which is in a way unfortunate because it meant that more and more people would be out out of work.

One part of my calculations for unemployment has been reports on real time tax data. Charles Biderman at TrimTabs has put a lot of work into collecting real time tax information to put together a real world summation of the current unemployment situation. Putting all things together my estimation of the current unemployment rate should be 10.6% for November, and if we back out the silly methods the BLS uses to gauge if a person is unemployment or not the number would be 18.9% (U-6 data).

A brief excerpt of the recent TrimTabs data:

(...)TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November. This past month's results were an improvement of only 10.2% from the 284,000 jobs lost in October.

Meanwhile, the Bureau of Labor Statistics (BLS) reported that the U.S. economy lost an astonishingly better than expected 11,000 jobs in November. In addition, the BLS revised their September and October results down a whopping 203,000 jobs, resulting in a 45% improvement over their preliminary results.

TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November. This past month's results were an improvement of only 10.2% from the 284,000 jobs lost in October.

Meanwhile, the Bureau of Labor Statistics (BLS) reported that the U.S. economy lost an astonishingly better than expected 11,000 jobs in November. In addition, the BLS revised their September and October results down a whopping 203,000 jobs, resulting in a 45% improvement over their preliminary results.

Something is not right in Kansas! Either the BLS results are wrong, our results are in error, or the truth lies somewhere in the middle.

We believe the BLS is grossly underestimating current job losses due to their flawed survey methodology. Those flaws include rigid seasonal adjustments, a mysterious birth/death adjustment, and the fact that only 40% to 60% of the BLS survey is complete by the time of the first release and subject to revision.(...)

Moreover, should the budget crises impacting many states and local governments continue then additional job losses will be in store for the Spring of 2010 (if not sooner) at the state and local levels. In my own state of New Jersey I am already aware of hiring freezes in certain Government agencies, and these hiring freezes were only recently implemented.