Tuesday, February 7, 2012

BLS Labour Surge or Labour Headache? How About Using Income Taxes in Real-Time?

Something I have wondered for a lonmg time is why don't they use collected taxes to determine the number of jobs as opposed to this BLS predictions and estimates figures.

Well, Trimtabs seem to be just that! The results are expected: not good.

" The biggest headline for all financial media today is that the US economy added a much more than expected 243,000 jobs in January, and 446,000 jobs over the past two months. That is many more new jobs than our estimate of less than 50,000 for January and our estimate of 90,000 for December and January.

Our estimate of a slowly growing economy is based primarily upon daily income tax collections. Either there is something massively changed in the income tax collection world, or there is something very suspicious about today’s Bureau of Labor Statistics hugely positive number. We continue to check and recheck our analysis of income tax collections. We are aware that another service believes that incomes are growing faster than we do. So far we have not found any errors or discrepancies in our work, but if we do, we will let you know.

No one I know has any idea as to how the BLS does this seasonal adjustment. BLS historic data is changed almost every month until the income tax returns for each year are available three years in arrears. In other words, the BLS currently has accurate data for 2008 and before.

I keep repeating that the BLS refuses to use the data embedded in income tax collections to be able to report real time jobs and wages. Why does it refuse? Could the reason it refuses to use real time data on jobs and incomes be because perhaps this jobs number is politically motivated? The entire world is looking at US job creation as a proxy on how well Obama is doing? Could the Obama administration be pressuring its economist employees to create the best possible new jobs number?

Obviously I am quite suspicious of the numbers that I see in today’s BLS press release. Remember most financial journalists and even stock market strategists do nothing more than rewrite government press releases. So do not expect very few others to question the good news".

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