Barry Ritholtz, a contributor to RealMoney.com, has a free article on TheStreet.com entitled: Rethinking the ‘Strong Jobs Recovery’ Scenario in which he discusses how the Bush Administration has been playing games with job creation numbers.
More analysis and details below the fold, but the ultimate upshot is this: at best, the job creation rate under the Bush Administration has fallen 1.6 million jobs short of what is needed to simply keep up with population growth (1 million new jobs a year)… at worst, fully half of the 3.4 million “jobs” created during the Bush Administration’s term of office are simply “vapor”, a best guess estimate / fudge factor that many economists find suspect. Which, if heavily but not altogether discounted, would put the Bush Administration’s job creation numbers at 50% of what is necessary to simply keep running in place, a “deficit” of 2.5 million. That’s pretty substantial, I’d say.
While the Bush Administration says that 4.4 million jobs have been created, this count is made from a low point that occured in March of 2003… Ritholtz says that:
you typically don’t get to pick your time periods when measuring performance. You especially don’t get to base it on trough-to-peak numbers. In most any series, there are more natural time periods, e.g., year to date, one, three and five years. As opposed to cherry-picking the most favorable-looking time periods, job creation historically has been measured from the end of the recession, which the National Bureau of Economic Research puts at March 2001.
Running the numbers this way, you get 3.4 million “jobs” created (of course, that says nothing about the quality of said jobs, which is another thing entirely – and generally presumed to be lower than the ones replaced, as he mentioned). Or maybe not… as Ritholtz points out, the numbers provided by the Bureau of Labor Statistics include a pretty significant “fudge factor”, designed to account for newly created jobs not otherwise measured; it is a legitimate tactic, but in this case, Ritholtz finds the numbers to be a bit suspect:
Of the 4.4 million new jobs from the March 2003 low until present, the birth/death estimate accounts for 1,639,000. That is an extremely significant 36.7% of new jobs.
By any measure, that’s a hefty estimated adjustment to an actual data-based number. It is not particularly credible to me to have a statistical projection be more than a third of a measured data series. To be blunt, it is a game-changing “adjustment.”
Or, put another way: almost half of the “jobs” created since the end of the recession, under the Bush Administration, are the product of what is essentially a guesstimate.
Ritholtz concludes this by saying that “the macro environment is far worse than most people believe” and leads him to have “bearish expectations for 2006”.