What the BLS is Actually Pulling its Numbers Out Of

Last week, the Bureau of Labor Statistics (BLS) indicated that the official government-reported unemployment rate had dropped sharply from 9.4 percent to 9.0 percent. While that would be a good thing, it’s simply not what happened. Here’s the real deal, according to statistician John Williams of ShadowStats.com:

“…the January 2011 seasonally-adjusted headline (U.3) unemployment rate declined to 9.0% from 9.4% in December, while, unadjusted, it rose to 9.8% in January from 9.1% in December. In like manner the broader January U.6 unemployment rate (including short-term discouraged workers and those forced to work part-time for economic reasons) dropped to a seasonally-adjusted 16.1% from 16.7% in December. Not seasonally-adjusted, though, U.6 rose to 17.3% in January from 16.6% in December.”

Basically, the BLS uses its seasonal adjustments to adjust the unemployment figures to suit its needs. As Williams puts it, the factors the BLS are adjusting for, “are artifacts of the severe and extraordinarily protracted downturn in U.S. economic activity, not from changing seasonal patterns.”

You can see a little more about where the BLS is pulling its numbers from in the cartoon below, which came to our attention via The Mess That Greenspan Made’s post on explaining the plunging jobless rate.