The Labor Department is putting the screws to the folks who are cheating on the unemployment and inflation surveys.
Sources tell me the Bureau of Labor Statistics is forcing the Census Bureau to change the way it fact-checks the surveys that produce some of the most important economic statistics compiled by the government.
And that tells me the Labor Department must believe there are substantial irregularities in the numbers.
I think it’s well past the time the Labor Department owns up to the fact that its surveys have been corrupted by manipulation.
Now it needs to determine how far back this problem goes.
Census produces a number of different surveys for the Labor Department and many more for other government agencies.
Up until now, Census field representatives — the people who actually conduct the surveys — were policed by their own supervisors. Now, apparently at the insistence of the Labor Department, the surveys will be checked by Census employees outside the field rep’s own region.
The problem is that supervisors within the same region aren’t necessarily going to be objective.
At the very least, they may want to okay questionable surveys simply because the supervisors need to meet the Labor Department’s quotas. Outright manipulation is also easier if the process is kept within the region.
The survey that determines the monthly unemployment rate and the survey that contributes to the monthly consumer inflation numbers are both affected by the new fact-checking rules, sources tell me.
The unemployment rate — which is closely watched but also the most misunderstood and worthless of all government numbers — is used by the Federal Reserve to determine monetary policy and by lawmakers to set social programs.
The consumer inflation numbers go directly into cost-of-living adjustments for millions of Americans, including Social Security recipients.
The inflation survey might undergo another change. Currently, field reps for the monthly inflation survey, the Consumer Expenditures Survey, leave a booklet at households, in which someone fills in purchases.
But if Census workers want to be dishonest — or just meet a quota for completed surveys — the paper document could be mishandled.
Census is now contemplating the use of an electronic device that will be left with families being surveyed about household purchases.
The Commerce Department’s Inspector General suggested changes to the fact-checking system after a six-month probe — prompted by The Post’s reporting — found the regional Census office in Philadelphia had failed to disclose one instance in which a field rep was falsifying hundreds of surveys.
As I wrote recently, Census has also blocked field reps and their supervisors from having access to previous months’ surveys. This was done to cut down on cheating by Census employees — who simply filled in survey blanks based on what people had previously said.
The Labor Department apparently has nothing to say about any of this since I didn’t get a call back.
Wall Street expects that the Labor Department will announce on Friday that 230,000 to 250,000 new jobs were created in July.
But keep this in mind: July starts a period in which government isn’t as generous with its estimates of growth during the summer as it was in the spring. July is when Performance Enhancing Estimates (or P.E.E., as I like to call them) start being reduced to a trickle.
That is, government is less apt to count jobs it thinks — but can’t prove — are being created by new companies that may not really exist.
Plus, as I mentioned, seasonal adjustments in general turn less positive during the summer months.
Wall Street may finally understand how such statistical “noise” affects summer job creation totals.
The experts’ guess for July’s numbers is substantially below the 288,000 jobs that the government previously said were created in June.
The nation’s gross domestic product came in at a 4 percent annualized growth rate for the second quarter, which was much better than the 3 percent the experts predicted.
And the first quarter’s contraction was only 2.1 percent, not the previously announced 2.9 percent.
So, the US economy is growing at a mediocre 2 percent annual rate in 2014 and, thankfully, isn’t contracting at the horrible rate once thought.
That’s true, at least, until the second-quarter GDP is revised in late August.
Nearly half of that 4 percent announced Wednesday came from businesses restocking shelves and not from final sales to customers.
And nearly all the stats that go into the first look at any quarterly GDP are guesstimates.
Still, the Federal Reserve was happy enough with the latest numbers to continue tapering its toxic quantitative easing program, a Robin Hood-like endeavor that steals from savers and gives to the rich.
The Fed said it would cut its monthly bond buying by another $10 billion.