Okay, here’s something that's sure to confuse some people: The Bureau of Labor Statistics announced on Friday the economy added 163,000 jobs in July while the jobless rate ticked up slightly to 8.3 Percent.
But if jobs were added, how did unemployment rise? Moreover, what does this mean for President Obama and Republican presidential
hopeful Mitt Romney?
Before we get ahead of ourselves, let’s try to understand the economic data.
First, the feds do one survey to learn how many jobs were created (payroll survey) and another survey to determine the unemployment rate (household survey). As you can probably guess, the two surveys can produce conflicting results.
The payroll survey asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. In July, the payroll survey showed that companies supposedly added 172,000 jobs, and federal, state and local governments cut 9,000.
The household survey asks whether the adults in a household have a job. Those who don't are asked whether they're looking for one. If they are, they're considered unemployed. If they aren't, they're not considered part of the work force and aren't counted as unemployed. The household survey produces each month's unemployment rate.
In July, the household survey showed that the number of people who said they are unemployed rose by 45,000. In a work force of 155 million, that’s enough to raise the unemployment rate to 8.3 percent from 8.2 percent in June.
Moreover, and this is crucial to keep in mind, "the report's household survey [also] showed that the actual amount of Americans working dropped by 195,000, with the net job gain resulting primarily from seasonal adjustments in the establishment survey [emphasis added]," CNBC reports.
"The birth-death model, which approximates net job growth from newly added or closed businesses, added 52,000 to the total," the report adds.
So, circling back to the beginning, how will this affect the election?
First off, you know Team Obama is going to eat this up, right? But let’s be fair. Despite that massive drop in the workforce, the Obama campaign can brag about the results of the payroll survey because the numbers supposedly increased, right?
Well, let’s think about this. The numbers may have “increased” -- but not enough to offset unemployment. Are we really this desperate for positive economic news that these numbers are being hailed as a sign of a “recovery”?
If “this is what passes for good economic news for the Obama administration, it’s more of an indictment than a boost,” writes Hot Air’s Ed Morrissey.
Secondly, if the president plans on using these numbers on the campaign trail, he should consider the following [via Zero Hedge]: “the [163,000] number was based on a non seasonally adjusted July number of 132,868. This was a 1.248 million drop from the June print.”
Wait, what? How did the BLS work their data to make what should be a plunge look like an “adjusted rise”?
“Simple: the BLS ‘added’ 377K jobs for seasonal purposes. This was the largest seasonal addition in the past decade for a July [Non-Farm Payrolls] print in the past decade, possibly ever, as the ... chart below shows,” Zero Hedge reports.
But wait! There’s more!
“[T]he Birth Death [B/D] adjustment … was +52k. How does this compare to July 2011? It is about 1000 [percent] higher: the last B/D adjustment was a tiny +5K!” the Hedge continues.
In other words, there's a whole lot of "statistical fudging" going on at the BLS.
What does all of this mean for Romney?
First, he needs to drive home the point that the only piece of supposedly good news comes from a survey of large companies and government agencies. The bad news comes from small businesses.
Secondly, he could make the case that the BLS’ data is slightly, um, “fudged.” But he probably won’t. The headlines are already out there and to publicly challenge the BLS wouldn’t get him anywhere.
Bottom line: Unemployment has risen to 8.3 percent and the economy supposedly added 163,000 jobs in July.
Team Obama is touting the new payroll survey results while the Romney campaign is attacking them over the fact that the bad news of the day involves small businesses, which, you know, is the part of the sector that’s supposedly “doing fine.”
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The Associated Press contributed to this report, this story has been updated.