The breakdown of December’s extremely misleading job report

Four days after Wall Street and the business media went gaga over the better-than-expected 292,000 new jobs created in December, let me tell you the non-adjusted truth: There were just 11,000 new jobs created last month.

That’s not my estimate or the guess of some on-the-fringe Obama administration critic. That comes directly from the Labor Department Web site. Here’s how to find it.

1. Go to the Labor Department Web site, specifically the page: http://www.bls.gov/ces/.

2. Now Look at the “Browse CES” list on the left side of the page, find “CES Databases” and click on it.

3. Next, go to the yellow box icons along the top and click on “Multi-Screen Data Search.”

4. After that, check off the box that says “Not Seasonally Adjusted,” then click “Next form.”

5. Then check the box “Total nonfarm” and click on “Next form.”

6. Then Highlight the first line that says “All Employees” and click “Next form.”

7. Then highlight “01 All Employees, Thousands” and click “Next form.”

8. Then highlight “0000000Total nonfarm” and click “Next form.”

9. We are almost at the end. Now click “Retrieve data” at that bottom of this page.

If you did that correctly, you will find a table titled “Employment, Hours and Earnings from the Current Employment Statistics Survey (National).”

This is the raw data — before the magic of seasonal adjustments. And let me stress that this is the Labor Department’s table. It doesn’t come from any outside source and I certainly didn’t — and couldn’t — put it together myself.

This table tallies the number of total jobs in the US in millions by month. So you’ll see in the right side of the table’s last line that there were 144.191 million jobs in the US in December 2015. The (P) next to the number means the figure is preliminary and might be revised.

“Here’s something that the Democrats can hold on to: The raw data does show that there were 2.7 million more jobs this past December than there were a year earlier.”

Now look at the number right next to that — the one for the previous month. It says there were 144.180(P) jobs in the US in November 2015.

Even your fifth grader could do this math equation: 144.191 million in December minus 144.180 million in November means there was month-to-month growth of 11,000 jobs.

Not the 292,000 that the Labor Department announced. Not a figure that was so good that it sent quakes of joy through the Fed, which (as I said in my special Saturday column) is looking for an excuse to raise interest rates again.

The 292,000 figure, which far exceeded the 200,000 that Wall Street expected, is the result of seasonal adjustments.

Now there is nothing sinister about seasonal adjustments. They are used throughout the economics world. Adjustments help smooth out the steep declines of July, when some education jobs end and auto plants shut down, and the declines of January, when many temporary holiday jobs end.

But seasonal adjustments also mask the true reality — that 2015 ended pretty normally and not with a bang.

In October, the US added a non-seasonally adjusted 1.2 million jobs, followed by 416,000 new non-seasonally adjusted jobs in November and the 11,000 new non-seasonally adjusted jobs in December.

And that makes a lot more sense, especially since the economy was getting weaker. The consensus — including input from the Federal Reserve Bank of Atlanta — is that annualized growth as measured by the gross domestic product was less than 1 percent in the fourth quarter of 2015.

If that GDP number holds up, the last three months of 2015 could be close to the weakest of the year. The Commerce Department announces GDP later this month.

That’s not exactly the robust economy that would seem to warrant a second Federal Reserve rate increase.

You can attach any conspiracy theory you’d like to Labor’s robust adjustments in December — but I won’t. President Obama will certainly mention job growth in his State of the Union message tonight. And the December job figure gives the Fed cover, for the time being, for that next rate hike.

Hillary Clinton will be thrilled that the economy seems to be doing better under her Democrats. And Donald J. Trump will continue whining that the employment figures are wrong, without offering any proof.

Now he has proof — although it might be tough for him to explain in a simple sound bite.
In fact, the 11,000 new, non-seasonally adjusted job gains in December was the month’s best performance in the last 10 years. Since 2005, December has averaged a loss of 292 jobs. Under George W. Bush, from 2006 through 2008, the average job loss was 389.

So there are the facts — now go throw your darts.

As I said, last month’s 11,000 real gain in jobs was turned into a seasonally adjusted 292,000 increase. For December 2014, a real unadjusted gain of only 6,000 jobs was also turned into a solid increase of 252,000 jobs.

That’s the magic of seasonal adjustments. The only problem is that those additional jobs don’t actually exist.

To be sure, on an annual basis, the number of non-seasonally adjusted job equals the seasonally adjusted jobs. In 2015, both tallies showed 2.7 million new jobs.

But the month-to-month unadjusted gains — or losses — tell a truer story.

Maybe that’s why the experts were puzzled last Friday as the robust 292,000 new jobs was accompanied by nary a budge in the nation’s labor participation rate. And wages are climbing only modestly.

The seasonal adjustment programs used by government agencies (and everyone else) look back five years for economic patterns, with recent years given the most weight. I’m no expert on this stuff, but the program installed in Labor’s computers probably saw the job losses in the 2011, 2012 and 2013 Decembers and set that as a baseline.

In other words, the computers were expecting massive job losses this year because three of the last four Decembers told them that’s what would happen.

So when there was very modest job growth of 6,000 in December 2014 and 11,000 in December 2015, Labor’s seasonal adjustments went crazy.

And this year’s modest gains were probably mostly weather-related.

“That’s the magic of seasonal adjustments. The only problem is that those additional jobs don’t actually exist.”

December was nice and warm in most parts of the country, allowing construction to continue on many projects that would have ordinarily have shut down.

Here’s something that the Democrats can hold on to: The raw data does show that there were 2.7 million more jobs this past December than there were a year earlier.

That’s a decent amount, although the growth is still too slow to re-hire all the workers who lost their jobs during the Great Recession and hire for the first time all the new people trying to enter the workforce.

And about 20 percent of those 2.7 million jobs occurred in the health-care industry, which could be a direct result of growth in ObamaCare rather than a sign of economic vitality.

So that’s how we were treated to an extremely misleading report last Friday. Thanks for your patience. You now know more than any of the so-called experts who scratched their heads on TV over the report.

Me, I’m now going to watch some cartoons to rest my brain.