Biderman’s Daily Edge 2/6/2012: The BLS and BEA’s Use of ‘Snail Mail’

Feb
07

 

I seem to have hit a nerve with last Friday’s Daily Edge questioning the validity of the Bureau of Labor Statistics guess that 243,000 seasonally adjust jobs were created in January. To reiterate, withheld income and employment taxes paid to US Treasury daily indicate about a 1% nominal growth rate in wages and salaries. That is much too slow a growth grate to generate 243,000 new jobs.

 

Those few who objected to my analysis focused solely upon seasonal adjustments. My point is not that the seasonal adjustments by themselves are the issue. Yes each January several million jobs are lost. And yes, the BLS claims to have a methodology as to how to adjust that. I really do not care about how and why they come up their seasonally adjusted job estimate.

 

There are two issues about the jobs number that are important. The first one, as I said earlier, is via analyzing income tax withholdings that wages and salaries are growing much to slowly to generate very many jobs.  A second and a much bigger and more important issue, is why does the Bureau of Labor Statistics still use surveys of employers and surveys of workers, which are then benchmarked to stale quarterly state unemployment tax data, a methodology first developed over 30 years ago?

 

When employers banks send the amount of money withheld from all employees paychecks to the US Treasury each and every payday, included in that information is total pre tax and total after tax income for all. Not only is wages and salaries available in real time but so is how many people are employed, how much are they making, where they are working and in what industries.

 

Why does the BLS and Bureau of Economic Analysis not use this real time Treasury data? What are they afraid of? The only reason they might not want to use real time data is that then who would need the thousands of govt economists who are good at doing surveys and seasonal adjustments? Not one person who responded to last Fridays Daily Edge asked or commented about my question as to why the BLS does not use the real time data. Nobody!

 

All the worlds financial markets trade in real time. The US government uses snail mail technology for the most important national financial information; incomes and employment.

 

This is not a new argument for me. I first wrote an oped in the Financial Times in 2007 asking why the Treasury does not use the real time data imbedded in withholding payments. The answer I got was to mind my own business. Maybe those of you out there who are big Ron Paul fans, perhaps you can ask him why he does not support using real time government data. I even tried to have several journalists do a story and those journalists got stonewalled by the BLS and BEA.

 

This is truly crazy making to me. That our government would ignore real time data so that the status quo of existing government jobs can continue is not a surprise. But what is a surprise is that no one else seems to care besides me.

 

Charles Biderman
President & CEO TrimTabs Investment Research
Portfolio Manager of TrimTabs Float Shrink ETF (TTFS)

Tags:                                          

7 Responses to Biderman’s Daily Edge 2/6/2012: The BLS and BEA’s Use of ‘Snail Mail’

  1. John Myers on February 7, 2012 at 3:45 pm

    Kudos for raising this issue again. You are right in saying that this should make us all crazy!

    As a cynic, I would attribute it to the fact that no president wants to give up the ability to manipulate these statistics when it serves his ends.

    Were I to be more charitable, I would say it is because the bureaucrats who issue the stats are afraid that a wholesale change in methodology would cause major economic ripples and ruin years of historical trend data. But they could just as easily run the two systems…the old survey and the new more accurate payroll-based numbers…side by side for a few years to mitigate this problem.

  2. Scott Petty on February 7, 2012 at 10:01 pm

    The BLS opts for surveys instead of real time data because it’s good for the business of government. It is much more difficult to manipulate data to get the results that you want when you are bound by a readily identifiable and verifiable set of inputs. It is infinitely more convenient for those seeking reelection and those riding the cronyism gravytrain to be able to conjure up key economic indicators without the unpleasantness of ensuring that they are accurate.

    • Chuck on February 8, 2012 at 1:59 am

      With sorrow, I must second this opinion.

  3. Chuck on February 8, 2012 at 1:57 am

    Charles, you are not the only one who cares. I care. And I confidently speculate that there are thousands of others who, if they were aware of the problem, would also care. I offer another explanation for this indefensible behavior of the BLS and NEA. Hubris. The hubris that inevitably creeps in and characterizes any bureaucracy with immunity to questioning.

    PS I really appreciate your work and your sharing a portion of it gratis.

  4. Sunil M on February 8, 2012 at 6:24 am

    I wholeheartedly agree on the surveys. Maybe they are trying to preserve survey jobs?

    Although how good is ADP data? ADP uses information from companies that utilize them

  5. Red Baker on February 8, 2012 at 10:28 pm

    Write a Biderman Employment Index which uses the bank-Treasury employment data. Joe Kernen and Rick Santelli would pick it up in a heartbeat.

  6. steve land on February 10, 2012 at 3:04 am

    sure it could be bureaucratic inefficiencies. however, that would be the exact argument being used by someone that “got caught” using these inaccurate methods of reporting. I would go further than happenstance, I would suggest that it is intentional, and conveniently left there to be used for a future political campaign. The question is what political color would benefit by not correcting this unrealistic reporting? Both of them? Where then do we, the American people stand? Outside both parties? Are they pretty much of the same opinion then, and the “real time” rhetoric is just for show? Or are we finally run by a bureaucracy that can be manipulated in secret by a few?
    Oh, I just hate to appear so naive, and yet sound this cynical.

Leave a Reply

Your email address will not be published. Required fields are marked *


Charles BidermanCharles Biderman is the Chairman of TrimTabs Investment Research and Portfolio Manager of the TrimTabs Float Shrink ETF (TTFS)

Biderman’s Practices of Success

I recently launched a new online course, Biderman's Practices of Success, on Curious.com (curious.com/charlesbiderman). The key to the practice of success is to be fully present in the moment and to be totally engaged in the important areas of life, particularly when we do not want to be. Read More.

Mr. Charles Biderman is an associated person of Trim Tabs Asset Management, LLC, an SEC-registered investment adviser. All opinions expressed by Mr. Biderman on this website are solely those of Mr. Biderman and do not reflect the opinions of Trim Tabs Asset Management, LLC, Trim Tabs Investment Research, Inc., their affiliates (collectively, “Trim Tabs”), or any other associated persons of Trim Tabs. No part of Mr. Biderman’s compensation from Trim Tabs is related to opinions which he expresses on this website, elsewhere on the internet, or in any other medium.

You should not treat any opinion expressed by Mr. Biderman as a recommendation to make an investment in any company discussed or cited in any of his postings. Mr. Biderman’s opinions are based upon information he considers credible, but which does not constitute research by Trim Tabs. Neither Mr. Biderman nor Trim Tabs warrants the completeness or accuracy of the information upon which Mr. Biderman’s opinions are based.

Archives