Way To Go

The U. S. Congress sets a federal budget every year in the trillions of dollars.  Few people know how much money that is so here is a breakdown of the 2011 budget:

 U.S. income:            $2,170,000,000,000
 Federal budget:       $3,820,000,000,000
 New debt:                 $1,650,000,000,000
 National debt:        $14,271,000,000,000
 Recent budget cut:       $ 38,500,000,000      (about 1 percent of the budget)

It's easy to get lost with the big numbers so let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.
 Total Jones family income                                     $21,700

Amount of money the Jones family spent:             $38,200
Amount of new debt added to the credit card:     $16,500
Outstanding balance on the credit card:             $142,710
Amount cut from the budget:                                       $385

Hope that this helps put all of the White House and Congress' hard work into perspective. 

Today's BLS Unemployment Report

Years ago, while an undergraduate accounting student, I read a cartoon that has stuck with me all these years.  A corporate controller was standing the president’s office.  The president had just asked, “What is net income going to be this year?”  The controller responded, “Well sir, what would you like it to be?”

I was reminded of that cartoon while analyzing the latest job report this morning.  The Bureau of Labor Statistics BLS press release stated:  "Total nonfarm payroll employment rose by 117,000 in July, and the unemployment rate was little changed at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, retail trade, manufacturing, and mining. Government employment continued to trend down.

So I decided to dig a little deeper.  First, I wanted to know Now, how we got to a  9.1% unemployment level with 117,000 jobs being added.  The  first apparent statistical sleight of hand was a reduction in  workforce number by 193,000  http://www.bls.gov/news.release/empsit.a.htm.  Clearly, without that reduction in the workforce number the  unemployment rate would have gone the wrong way.

When you read down to line 4 (Table A) again, you see the absolute number of people working was down a further 38,000 for the month.  Those people must be missing in action. 

The CES Birth/Death Model for July showed a decrease of 18,000 jobs (try to mentally reconcile that with the 117,000 job gain in the BLS press release), including 10,000 more manufacturing jobs lost and 15,000 in trader, transportation, and utilities.  You will find that table at http://www.bls.gov/web/empsit/cesbd.htm.   Look at the “2011 Net Birth/Death Adjustment, not seasonally adjusted (in thousands)” table, July column, last row)

I still stick with www.shadowstats.com when I want to know that the real unemployment rate is.  The Shadow Statistics unemployment rate is at about 22%.  Look around you.  Do a reality check.  What seems more real the 9.1% unemployment rate reported by the BLS or Shadow Statistics 22%?

I always tell my students to do reality checks on their numbers.  Do they feel right?  Do they past the sniff test?  If they smell like crap then they probably are, no matter what the person trying to sell you the numbers says.