The Labor Department reported a loss of 2,689,000 jobs in January…In January 2010, as I said, there was an actual, unadjusted job loss of 2,858,000 jobs. To make it simple, the government computers were expecting a bigger unadjusted loss than the 2,689,000 jobs because last January’s decline was 2,858,000. Why weren’t there as many job losses this January? Very likely because the weather throughout the country is a lot milder this year than during the past two Januarys. A loss of jobs that isn’t as bad as expected turns into a job gain. Does that mean there really are 243,000 new jobs out there? Absolutely not.
Let’s say there are rumors in your company that 300 people are going to be laid off. Instead, management decides to fire just 200. Two hundred people, of course, have lost their jobs. But, adjusting it for expectations, 100 people didn’t get fired. Using this analogy, the government would say that, on an expectation-adjusted basis, 100 jobs were created. That’s sort of what happened in the January employment report because of seasonal adjustment.
Let’s get this straight. Jobs went down 2.7 million instead of 2.9 million in January and this is a job gain of 243,000 jobs? Okay. The labor force lost 1.7 million people, which trnslated into a seasonally adjusted 1.2 million people, so the labor force participation rate continued its drop to historic lows among prime age workers.
Meanwhile, the actual non-seasonally adjusted jobs number for December and January is a loss of 2.9 million jobs (which the BLS translated, using a methodology that we were unable to determine, into a job gain of 446,000 jobs). And these jobs losses and labor force losses are a cause for celebration? Huh? It’s all kind of confusing to us, and not in a good way.