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Gallup Finds Unemployment Increased In December, Underemployment Is At 6 Month High, Blasts Government Data Fudging

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Tyler Durden
Zero Hedge
Jan 7, 2011

Following this week’s ebullient ADP private payrolls report, the sellside has succumbed to an orgiastic frenzy suggesting that tomorrow NFP number may be as high as 580,000 (as reported earlier). While there is no chance on earth of that happening absent all of US data gathering to have been outsourced to Beijing, what is more interesting, is that organizations which track employment trends in real time have found that neither is ADP’s optimism justified, nor is there absolutely any basis to expect a blow out NFP number tomorrow. Gallup has found that not only did the unemployment rate increase in December from 9.4% to 9.6%, that disgruntled part-time workers who want full-time work increased from 8.6% to 9.4%, the highest since September, but that the most important metric in a labor force increasingly consisting of part-time workers, underemployment, has surged to 19%, the highest since June!

Unemployment, as measured by Gallup without seasonal adjustment, increased to 9.6% at the end of December — up from 9.3% in mid-December and 8.8% at the end of November.

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The percentage of part-time workers who want full-time work increased to 9.4% of the workforce in December — up from 9.2% in mid-December and 8.4% at the end of November.

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The increase in Gallup’s U.S. unemployment rate and the worsening in the percentage of part-time workers wanting full-time work combined to raise underemployment to 19.0% in December from 18.5% in mid-December and 17.2% at the end of November.

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Gallup Finds Unemployment Increased In December, Underemployment Is At 6 Month High, Blasts Government Data Fudging 101210banner4

So how does one reconcile this seemingly ridiculous divergence between disparate data sets which are supposed to measure the same underlying key economic strength indicator? From Gallup:

The U.S. unemployment picture may seem unusually confusing these days. Gallup monitoring showed a sharp improvement in the jobs situation in November, particularly as companies added holiday workers. However, the government surprised Gallup and most other economic observers as it reported last month that the U.S. unemployment rate increased to 9.8% in November. It appears that the government made a larger seasonal adjustment than was generally anticipated for the month.
ADP on Wednesday reported that the economy added 297,000 private-sector jobs — far above the consensus expectation that the government on Friday will report the U.S. economy added 140,000 new jobs overall in December. In contrast, Gallup shows the unemployment rate increasing as companies let go of holiday workers. At the same time, Gallup’s Job Creation Index shows monthly average hiring and firing conditions essentially unchanged over the past three months.

And here is the kicker: as Gallup can not openly accuse the government of manipulating data, it has to apologize on behalf of the BLS of having seasonally adjusted data which skews it (unlike Zero Hedge which openly surmised that the November NFP number was a disaster only to encourage the passage of the latest stimulus, with us also suggesting that the December number will be stellar merely confirming that the stimulus is doing miracles to the “economy”). In other words, the biggest beneficial fudge factor that the government continues to rely on: the various seasonal adjustment (not to mention the birth death model), may well push some imaginary number not grounded in anything close to reality well into the 7 digit range, and result in the S&P jump by a double digit percentage. And as the BLS is wont do to, it will eventually revise the number to something closer to reality, but by then the market will have long forgotten about the most recent manipulation. Bottom line: all in a day’s work for the department of truth.

Because the Gallup unemployment measure is not seasonally adjusted, it tends to more accurately reflect what is actually taking place in the U.S. job market — and may not agree with the government’s estimate that is seasonally adjusted. Further, Gallup’s data tend to be more up-to-date than the government’s because Gallup polls on the unemployment situation continuously. Combined, seasonal adjustments and timing differences likely explain much of the disparity between Gallup’s measures of underemployment and unemployment, compared with those reported by others.

Gallup’s politically correct conclusion is spot on: no matter the spin, the illusion, or the data manipulation:

Whatever the government reports about unemployment on Friday, Gallup’s U.S. underemployment data for the end of 2010 show that nearly one in five Americans continue to be unemployed or employed part-time looking for full-time work. In turn, this underscores the importance of job creation as a top national priority.

It is therefore too bad the top national priority is and continues to be manipulating stock markets, and creating a wealth effect for some and a poverty effect for most.

This article was posted: Friday, January 7, 2011 at 4:58 am





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