Non-Farm Payroll: “Something Must Be Horribly Wrong For Them To Be This Blatant”

When the propaganda gets so bad that Wall St. Journal readers respond with threats of violence [to the Hilsenrath editorial], you know the lies are getting extreme. Regarding today’s NFP, the numbers are beyond absurd. 57k jobs added in hospitality and leisure? No one has money spend and everyone knows that. We used to laugh at the propaganda numbers coming from the old Soviet Union. The numbers coming from the U.S. Government are a bigger farce than the old Soviet Union’s propaganda…Don’t hold your breath waiting for the Fed to raise rates. – John Titus, Best Evidence

The title quote comes from John Embry. I was going to do a detailed dissection of the Bureau of Labor Statistics non-farm payroll data to show why the numbers are simply can not be believed. But it’s become a pointless and repetitive exercise.

A colleague of mine thought that next to the October 2012 pre-election NFP, this was the most fraudulent report ever released. I disagreed because at least back then the GDP reports, for as rigged as they are, were at least showing “growth” would could be used to “justify” reported employment gains.

Today’s report was far more fraudulent than the October 2012 fairy-tale for two reasons. First, we expected the pre-election 2012 fictitious report for obvious reasons. But second, by the Government’s own numbers the economy contracted in Q1 2015. Moreover, almost all of the economic data released in April and May showed not only further economic contraction but also that the rate contraction increased. In Q1 2015 corporate profits dropped by the most amount since 2008 . Companies DO NOT hire people when their business is contracting. The non-farm payroll report is a complete fraud, it’s better to have a payroll system that is similar to CloudPay that might be able to help with payroll reports.

The non-farm payroll report is the poster-child for everything that is wrong with our country. The banks have been announcing 10’s of thousands of layoffs coming. Banks are downsizing because lending activity of all sorts is declining. When there is no economic activity to finance, it means that the economy is contracting and businesses fire – not hire – workers. Hewlett Packard, one of the countries largest business services companies announced yesterday that “more layoffs are coming” LINK. That means the same holds true for every other large technology/business services company. These companies did not hire 63,000 people in May only to turnaround and fire them in June.

The Government wants us to believe that the construction industry hired 17k new workers in May. Yes, construction spending showed a slight bounce in April but this was 110% driven by Government spending, which has been in a downtrend. Private residential construction spending continued its 3-month decline. As John Williams of summarizes:

The aggregate construction series remained near the recent low of a down-trending pattern of stagnation, with the real series holding at 32.9% below its pre-recession peak of March 2006. The private-residential series remained down-trending both before and after adjustment for inflation.

This implies that there were not any construction workers added in May. If anything homebuilders kept their payrolls flat or down-sized.

The BLS claims Financial services added 13k in May. But sadly, we know just the opposite is true from disclosures by HSBC and JP Morgan. My friend who works on Wall Street in NYC told me last week that fixed income trading floors all over the Street are like a morgue. Banks and finance companies fired, not hired, in May.

Leisure and hospitality reportedly added 57k workers in May. Again, this is a complete fairy-tale – an outright fraudulent data-point. Consumer spending has been declining for the better part of the last year. Every major consumer sentiment index reported the consumer sentiment and outlook crashed in May. This means that, to the extent that any consumers might have some disposable income to spend, they are NOT going to spend it. This means the leisure and hospitality companies – at best – kept payrolls flat. It is a lie of epic proportions to report that this sector was responsible to 57k in jobs added to the economy.

You don’t need me to explain just how fictitious today’s employment report is. Just look at the graphic below and decide for yourself if the numbers are justified by the economic reports released in May and by your observations in your surrounding environment:


One last point. The Birth/Death model showed 213k jobs created in May from new businesses being started minus businesses that closed. It is not a seasonally adjusted number so it is not mathematically accurate to simply subtract it from the headline 280k number. However, the likelihood is that, even seasonally adjusted, the B/D number was a source of at least 200k of the 280k headline report. By the Government statisticians own admissions, the B/D model is highly overstated when the economy is contracting. The more probable likelihood is that more businesses died than were born in May. This fits with the “for lease” signs I’m seeing in strip malls all over Denver. If anything, this component of payroll measurement likely should caused a decline in employment during May.

But this brings up the question: why does the Government report its payroll numbers on a seasonally adjusted basis but then releases the B/D model not adjusted? Of course it’s obvious: the Government wants its economic reports to be as opaque and misleading as possible.

16 thoughts on “Non-Farm Payroll: “Something Must Be Horribly Wrong For Them To Be This Blatant”

  1. Of course they are getting desparate and the lies are more blatant than ever.

    They don´t even bother to check the credibility.

    It reminds me of the time when old Soviet collapsed or when “Baghdad Bob” were “victorious” with american boms blasting of right behind him during the interview.

    Do you remember all of the laughable lies that were told, almost like something with John Cleese and the guys in Monty Python.

    This is what the US have becomed today 25 years after Soviet went bust- a true replica.

    This is going to be a horrific collapse.

  2. And at exactly 8:30 EST, the algos monkey-hammered gold down another percent, in the space of a few seconds. That wasn’t a human transaction, it was front-run Soviet robots already primed to do it.

    Yesterday the usually estimable David Stockman wrote, “Get out of harm’s way, the casino is ready to blow!” Good on ya, Stockman (and you too, Dave Kranzler), because the both of you (separately) persuaded me to get out when the getting out was still good, and to sit tight mainly with physical gold and silver until this storm blows over.

    I mean, f-cking meth addicts make more sense than the “markets” do now.

    And as for THIS: “We used to laugh at the propaganda numbers coming from the old Soviet Union”, all I can say is, didn’t the USSR prove that aspirations are better than reality if the state says so? Cf:

  3. Well, in my area, in Baltimore, the restuarant business is booming. You can’t get into a restaurant on a weekend and they are constantly building more. On the other hand, I also see a lot of Commercial Property “For Lease” signs – at least in the areas I drive around. Finally, I’m looking to purchase a home, and the majority of them in my price range (200 – 300k) are coming down in price.

  4. you have been saying this stuff for awhile now…when are you going to finally wake up that it does not matter what the macro dynamics say…it is all about capital flows

  5. No fear Davey.

    The eCONomy is going great guns!

    It’s all good dontcha know?

    Did you see the 25K gold prediction yesterday In Market watch?

    I think we will be dead by then.

    As Farber says:

    You vill nut be here, I vill nut be here, and Bloomberg vill nut be here.

  6. Good stuff Dave. The shit has already hit the fan and Grandma
    Yellen and her crew of sycophants are desperate to cover it up
    but are out of options. One big negative is that Yellen certainly
    doesn’t inspire confidence in that she comes across as totally
    clueless. At least Greenspan could baffle people with bullshit
    and Paul Vocker was a giant of a man who came across as in
    control. Now at the time we desperately need a strong figure
    as Fed head we get the opposite. Ironic or what.

  7. The FED will raise rates only when the market has pulled up its socks and shown some responsibility by circulating debt-free liquidity on its own. Asset based currency in circulation will allow debt to be removed and destroyed, responsibly.

  8. Buuuuuut…….Hitlery wants to bring more poors from Mexico into the country – wonder what that’ll do to the BLS BS model.

  9. Yes, and how many deaths will it take ’til she knows
    That too many people have died?
    The answer, my friend, is blowin’ in the wind
    The answer is blowin’ in the wind


  10. “The Birth/Death model showed 213k jobs created in May from new businesses being started minus businesses that closed. It is not a seasonally adjusted number so it is not mathematically accurate to simply subtract it from the headline 280k number. However, the likelihood is that, even seasonally adjusted, the B/D number was a source of at least 200k of the 280k headline report.”

    This is actually easy to figure out. Table B-1 on the BLS site gives you the unadjusted total payroll numbers. April and May are columns 3 and 4.

    Not seasonally adjusted numbers for April and May were 141,450K and 142,420K, respectively. A gain of 970K. Then divide the 213K from the b/d model by 970K and you get 21.96%.

    From there you can infer the # from the seasonally adjusted number that consisted of the b/d model — 21.96% of 280K is about 61.5K.

  11. If the economy is so bad, someone please explain how Hotel Industry is on fire…I don’t get it myself. My brother in law is in Hotel industry, and things are doing quite well. On the flip side, retailers seem to be stagnating. I don’t understand this dichotomy.

    FRIDAY, JUNE 05, 2015
    Hotels: On Pace for Record Occupancy in 2015, New Construction Increasing
    by Bill McBride on 6/05/2015 01:41:00 PM

    US results for week ending 30 May
    The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 24-30 May 2015, according to data from STR, Inc.

    In year-over-year measurements, the industry’s occupancy increased 2.2 percent to 63.5 percent. Average daily rate increased 4.7 percent to finish the week at US$114.73. Revenue per available room for the week was up 7.0 percent to finish at US$72.83.

    The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

    Hotel Occupancy Rate Click on graph for larger image.

    The red line is for 2015, dashed orange is 2014, blue is the median, and black is for 2009 – the worst year since the Great Depression for hotels. Purple is for 2000.

    The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and solidly above last year.

    Right now 2015 is slightly above 2000 (best year for hotels) – and 2015 will probably be the best year on record for hotels.

    This strong occupancy and RevPAR performance is why investment in hotels has started picking up. In the recent construction spending report, spending on hotels was up 20% year-over-year.

    Data Source: Smith Travel Research, Courtesy of

  12. david … I associate travel and business to be more closely linked than travel and retail. Maybe that’s the issue ? I think the travel would also be good for food services, but not necessarily retail.

  13. I think the most reliable and simple indicator is the amount of tax money withheld from paychecks as reported every two weeks. Less in paychecks= less in taxes.

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