There should be one more good employment report, but then — watch out.
I’ve already explained what I call government P.E.E. — Performance Enhancing Estimates. They are kinda like Performance Enhancing Drugs, only P.E.E. is legal and government economists seem to think they are doing us a favor by making economic statistics look stronger than they really are without explaining what they are doing.
So, if the employment report — scheduled for an earlier-than-normal release this Thursday — is as strong as I think it will be, a lot of experts who have been wrong will emerge from hiding and take the opportunity to say nice things about an economy that declined by an annualized rate of 2.9 percent in the first quarter and didn’t — as widely predicted — do pedal-to-the-metal great in the second quarter.
The excuse for the first quarter’s contraction was, naturally, the weather. It’s convenient, of course, because nobody can predict the weather and — therefore — nobody can be blamed for their wrong economic forecasts.
(“Boss, it snowed in January. Who’dda expected?”)
No matter how much P.E.E. the government tinkles on its numbers, the folks in the workplace always understand what’s going on in the job market. President George H.W. Bush learned the hard way in 1992 that he couldn’t deceive people about the economy. And President Obama is now finding that cheerleading doesn’t work.
Only work works. People — most, anyway — want to work!
So despite two consecutive months of alleged good employment growth, our current president’s ratings are in a ditch because — among other things — folks know the truth: After six years of a purported economic recovery, the job market is still weak, the positions that are being created are substandard, the unemployment rate is bogus and Washington is full of crap.
Crap, I used the word “crap” in a column. There goes my chance of ever getting a Pulitzer. So let me add something else that’ll annoy the purists (and probably my mother). Remember the old saying: “Don’t pee in my ear and tell me it’s raining.”
Well, Washington shouldn’t P.E.E. on its numbers and try to convince us it is just watering those green shoots that former Federal Reserve Chairman Ben Bernanke thought he saw so many springs ago.
As I’ve been explaining since — it seems — my boyhood, the government juices its employment statistics in the springtime. The original purpose was probably innocent enough. Back in the olden days of paper forms, companies came into business in the spring and couldn’t always be counted by government surveys.
(Although I do wonder why, in a day and age when someone probably knows every time I flush the toilet or even think about flushing, the Labor Department can’t just look at newly created payroll deductions sent to the IRS and figure out that a new company just came into existence.)
Anyway, the experts believe the Labor Department will announce on Thursday that around 214,000 new jobs were created in June. That’s a decent number and will continue an upbeat, stronger trend that began in April and continued in May.
But, as I explained when I predicted those good April and May figures, government P.E.E. is all over those months’ numbers, as well as June’s. Here’s the nitty (I’ll get to the gritty in a bit):
The Labor Department’s Bureau of Labor Statistics added 234,000 jobs in April that it believes — and no doubt hopes — were created by newly formed companies that weren’t included in its monthly surveys. (Again, why not just consult tax records?) And it added 205,000 of these perhaps phantom jobs in May.
The numbers I just gave you are before seasonal adjustments — so only about 40,000 or so of those phantom figures show up in the bottom line that headliners will pick up in the next day’s newspapers.
In other words, about 40,000 of the 234,000 total jobs — after seasonal adjustment — that the Labor Department said were created in May might not really exist. In fact, it’s quite possible that the economy was so much slower this spring than normal that companies were quietly going out of business and the job losses from those closures weren’t being properly recorded by the government.
In June 2013, Labor added 140,000 jobs to the pre-seasonally adjusted total. The P.E.E. for this June — Thursday’s number — should be around the same 140,000.
Not as much as April and May, but enough to keep the people who are hanging onto the new job creation figure happy.
Now the gritty: During the summer months, the number of phantom jobs drops sharply, which should cause people to be disappointed by the monthly figures. The September job report (announced in early October) will have a deduction and could be the most disappointing announcement of all.
So by the end of the summer, the job figures, minus the P.E.E., will likely reflect better conditions despite other statistics like the GDP that are indicating a very weak economy.
That’s why — as I’ve said before — Fed head Janet Yellen will probably have a problem keeping her promise to rid the world of the scourge known as Quantitative Easing.