The Bullshit of Government Statistics

I just got the following breaking news alert from The New York Times.

“U.S. Economy Adds 290,000 Jobs in April; Jobless Rate Rises to 9.9%”

Let’s parse this.  The first clause says “U.S. Economy Adds 290,000 Jobs in April.”  This means to me that a bunch of people found new jobs in April.  A bunch.  Yay!  Good economy.

The second clause says “Jobless Rate Rises to 9.9%.”  This means to me that the number of people in the U.S. that don’t have jobs went up in April.”  A quick search showed that the March “jobless rate” (actually the unemployment rate) was 9.7%.  That’s a big relative jump, especially given that it was 9.7% for the first three months of 2010 according to the Bureau of Labor Statistics Economic News Release titled Employment Situation Summary that came out a few minutes ago.  Boo!  Bad economy.

How could this be?  The simple explanation is mid-way through the WSJ article titled U.S. Added 290,000 Jobs in April which appeared about six minutes after the NYT article:

“The two numbers are calculated by the Bureau of Labor Statistics in different ways. The payroll figure is taken from a survey of employers, while the jobless rate is calculated using a household survey.”

I just read through the BLS report and looked at a few of the tables.  Yes, there’s a ton of data here.  However, it breaks all kinds of rules about how to present data to reach a conclusion.  Our friends at the BLS need to hire Edward Tufte to get some help with their data presentation skills.

There are now two stories based on two completely calculations munged together into one sound bite.  The explanation will likely turn into “more people are looking for jobs now.”  But why is the denominator shifting around?  Weren’t those people already jobless (unemployed), even though they weren’t looking for jobs?  Oh – wait, if we include the people not looking for jobs in the historical unemployment calculation, the unemployment rate goes up, maybe by a lot.  Eek – wouldn’t that be more scary.

It’s a simple game the government is playing with the numbers.  Occasionally I’ll run into a company that does this – usually around revenue vs. gross margin dynamics, or bookings vs. revenue, or GAAP accounting vs. actual cash flows (where what really matters is cash flows.)  Picking the better number vs. dealing with reality is disingenuous at best; presenting them in conflicting ways that obscure the message is bullshit.

Oh – and 20 minutes later the newest NYT Breaking News Alert is now “Four-Month Rise Strengthens U.S. Job Outlook.”