Flying Blind

By Greg Hunter’s

Last Friday, the Bureau of Labor Statistics (BLS) reported the economy created 192,000 new jobs and the unemployment rate fell to 8.9%.  The good news was reported almost everywhere as a turning point in the U.S. economy.  For example, CNBC said, “U.S. employers hired more workers in February than in any month since May last year and the unemployment rate fell to a near two-year low, the strongest sign yet the recovery has become self-sustaining. . . . “We have moved into the expansion phase of the economic cycle and the economy is self-sustaining,” said Brian Levitt, an economist at Oppenheimer Funds in New York.” (Click here for the complete CNBC story.)

But if you look deeper into the numbers, as John Williams does at, you don’t see the turnaround picture.  In fact, just the opposite is going on.  In his latest report, Williams estimates the government is routinely overstating job growth by “230,000 jobs” a month.  Using simple math, 192,000 created jobs (according to BLS) subtracted from 230,000 overstated jobs gives you an actual net loss of 38,000 jobs.  I called Williams to check my analysis, and he told me it is not that simple because the government’s estimations are “the worst in modern economic history.” Williams says unemployment numbers are “openly misleading” and virtually “worthless.”

In an interview yesterday from his San Francisco office, Williams told me when it comes to calculating unemployment numbers, the BLS is “flying blind.” He admitted, “It is hard to put an exact number on the actual job losses last month, but we likely lost jobs—not gained them.” He added, “The job losses could be as high as 30,000 for last month.”

This recession is the deepest and longest in modern history and the worst economy since the Great Depression.  Williams told me the reason job figures are so far off is modern BLS calculations have never been tested in this kind of severe downturn.  One reason the unemployment numbers are so misleading is the Birth-Death Model—meaning the birth and death of companies, not people.  In simple terms, the Birth Death Model overestimates jobs that are created by startup companies and often does not subtract jobs when companies go out of business.  So, what the government is giving us are giant distortions in employment and unemployment.  According to Williams, unemployment is not trending down, but the economy sure is.

A couple of recent stories support Williams’ analysis.  Gallup released a story last week that showed unemployment rose and did not fall below 9% as the government recently reported.  The story said, “Unemployment, as measured by Gallup without seasonal adjustment, hit 10.3% in February — up from 9.8% at the end of January. The U.S. unemployment rate is now essentially the same as the 10.4% at the end of February 2010.”  (Click here for the complete Gallup story.) Bloomberg also reported last week that more layoffs are coming–not more hiring.  The Bloomberg story said, “Employers in the U.S. announced more job cuts in February than in the same month last year, led by a surge at government agencies.  Planned firings increased 20 percent to 50,702 last month from February 2010, the first year-over-year gain since May 2009, according to a report today from Chicago-based Challenger, Gray & Christmas Inc. Announcements at federal, state and local government offices almost tripled from last year.” (Click here for the complete Bloomberg story.)

According to, unemployment is 22.1% if calculated the way BLS did it before 1994.  True unemployment and under-employment has been stuck above 22% for months. contends that before this so-called Great Recession is over, it will go as high as 35%.  By then, we won’t be calling this the Great Recession but the Greatest Depression.

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  1. Deborah

    I have always wondered how accurate these numbers are. I worked as an independent contractor for a hospital doing medical transcription. When my job was outsourced, I became unemployed but cannot collect UI due to my IC status. Unemployed ICs likely are not included in the numbers. The work is being done by others and the hospital does not report this as layoffs (now about 50 people). (PS – the hospital is already regretting this move).

    Many people I know who were collecting unemployment have run out of benefits. Unfortunately, these folks are in the 50-60 years of age range and are now living off their retirement income. Several college grads, have yet to find a job. Where do they figure in the govt. numbers?

    • Greg

      Thank you Deborah, Art and M Smith.

  2. Art Barnes

    CNBC has lost all credibility. Anyone who continues to watch it must do so for entertainment only. I wonder if a legitmate economic journalist could get a job there. Requirements to become staff is that you must either believe in fairy tales or rationally accept that you must be a closet spoksman for the government.

    CNBC can call me to tune in when they report this breaking news: “CNBC has decided to tell the truth about the economy”. Otherwise, CNBC is irrelevant to any economical issues of our time.

  3. M SMITH

    Greg, the Obama admin has done nothing but spout lies from the day they were sworn in & before that also.The nut case running Health & Human Services has lied in front of congress & nothing is done to her? Obama has spent trillions that failed to produce jobs because he gave it mostly to the green movement & unions,had it been put toward the small business sector it would been a much different out come, most would think. But thats all gone & many got rich while we are left a shell of a nation. The only jobs out there is if you can come up with a ideal & backers to start your own business!

    Off topic here, but the Bernank may surprise us on delaying QEIII because of the pressure he is getting from all sides, causing all assets to tank by 20/40%, that would hurt silver, but only for a short time because also stocks would tank also. It would be a chance to buy more silver/gold. The author who is a big believer in Silver/Gold thinks if QEIII is delayed,gold would not be hit as hard.It posted over at march 8,2011 by Chris Martenson, it makes you rethink just how to proceed forward as things get really crazy. It makes sense to be prepared as things get worse faster than most have thought. Keep the great info coming, all of thank you & those that help you.Mickey

  4. nm

    Greg Said:
    “I don’t think QE 2 will end, it will be followed by QE3. That’s when Pandora’s box will be pried open and the dollar will tank as interest rate rise. The NE is only doing well because of money creation, and that should make you a little nervous because it cannot go on forever”…

    The northeast (particularly New York, DC & Boston) are doing fine and maybe a lot of it is because of QE, but in Massachusetts, it’s the Bio-techs and the IT firms. How are they benefiting from QE?

    I’m looking for your opinion on whether you’d leave a public sector job (funded by both state and federal money) and go into a higher paying private sector job? Would you do that in this economy?

    Everything I’m reading is telling me to stick it out with my lower paying public sector job, but friends are telling me to go and get a higher paying private sector job, but I see massive layoff’s coming.

    • Greg

      I would not quit a job until I had a job. Government layoff are coming too according to a story in the “Flying Blind” post. Quitting one job for another is your choice. I hope you make the right one.

  5. Mike

    I have a rock solid inside source. Jon Williams is right and from where I am sitting he might even be a bit conservative. The worst thing that is happening right now, i.e. wealth destruction, isn’t even and won’t be talked about in the M.S.M. for years. People have lost everything they all flushed out their 401ks in 07-09 in a futile attempt at bridge loan financing to withstand what they thought was a temporary situation. Greg, they can’t get their savings back, they don’t have the years or the jobs to do it with. Now these people are all in debt and tax trouble. We are starting to see the people who received government economic stimulus auto and home subsides go south fast and the restaurnts in this country can’t take 4-5 dollar a gallon gas prices. IMO They will hold this facade until the presidential election after that all hell will break loose.

  6. James M

    What would you expect from a government that can do no wrong and when it does, covers it up? What would you expect from the coporate owned MSM but for them to play along with the charade? Anyone who even watches TV for any kind of news is an idiot unless they are using the disinformation to make accurate assesments. I have been doing construction work for 20+ years and thank God I do fairly specialized carpentry work like home improvement and historical restoration because I have only been averaging 2-3 days of work a week and everyone I know is hurting really bad, most far more than me. I am also lucky in the respect that I have no children and I rent instead of own. People, even in the wealthiest communites around Boston that did not lose a dime on their home values are holding on to their money like I have never seen before. People that generally have me over at least 3-4 times a year to fix some thing or another are no longer calling at all. There is absolutely no improvement at all and it is getting worse not better. Everyone wants and expects work done to be discounted to the point that it is not worth the gas money to drive out sometimes. You can claim all the recovery and show all the bogus stats you like but it is not showing up to the average person. How stupid do these idiots think we are? Seriously, this is Orwellian at best. Good is the new bad, unemployed is the new employed ect. The only bright side is that people are becoming more and more aware that the govt and the talking heads are nothing but liars full of hot air and their credibility is at around ZERO. That is excellent news as far as I am concerned. The more hot air they blow, the less relevant they become. Americans lost their cynicism but they are quicly getting it back.

    • Greg

      Amen James M and Sam,

    • Peter

      Great realism and elequance in your words.
      Unfortunatly the Federal government and both administrations (Obama and Busch) have opted for the greatest use of behavioral economics during the last 10 years. Throw in the World Trade Organization, NAFTA and most favored nation status for China and you can see the job desctruction before your eyes. Corporations have captured the political high ground and have been able to dictate economic policy that has killed the middle class. Most workers are clueless, without the critical thinking skills to connect the dots that lead to their destruction We have gone from the greatest manufacturing powerhouse of the 1970’s to an also ran in most things except weapons and military related manufacturing.
      We have allowed this to happen. We will certainly get what we deserve.

  7. Sam

    Dear Greg,

    Somehow, the cartoon heading your column seems to say it all.

    As a graduate student, I was told to worship at the altar of the BLS. I never did, and always challenged my instructors. But then, I had an “in.” Mine was that I was a “veteran” of unemployment, and knew how the numbers were messaged.

    One person working two part-time jobs equaled two people working one part time job.

    A person working at a temp job was a job “created;” even though the person was still collecting unemployment to supplement his meager “paycheck.”

    Unemployment numbers dropped because of not only those whose unemployment ran out, but also because those who returned to school, even if only part-time in the evening, were booted off. So were people who had to take time off from the job hunt because they were injured, had the flu, or some other illness. It was almost impossible to get back on unemployment.

    If the unemployment office called you about a job they believed you were suited for, you had to apply for it and take it if hired, no matter how bad the company. (I was once sent to “a place of business” where there was an active knife fight going on. At another, they wanted 5+ years experience as a bookkeeper, gave a test, but only paid minimum wage!) If you didn’t take the “job” you were booted off unemployment.

    BLS will lie because the current administration means more jobs and money for bureaucrats. The Lame Stream Media will lie because the POTUS is their boy, and will have him re-elected no matter what it takes.

    The lies cannot continue. They have to end.

  8. Rob

    Hi Greg!
    Before this Great Depression is over it will be recognized as the Tribulation of Revelation. The NWO is the corporate Beast of Revelation chapter 13. It will be prodded by the corporate False Prophet to make war on the Saints just like Pilate and the Roman army were prodded by the Religous order of the Jews to kill Jesus and the apostles 2000 years ago. The NWO will force an electronic currency with a bodily mark to be required to buy and sell. That will be the physical sign we are already 3 1/2 years into 7. For more truth of the scriptures please join us at unleavenedbreadministries.
    In CHRIST! Rob

    • da bear


      sounds about right.

      da bear

  9. Otter

    Hi Greg –

    The BLS manipulates the monthly unemployment numbers with the Birth-Death model. The quarterly GDP numbers are manipulated by jiggering the inventory numbers. The monthly Inflation Rate is manipulated by stripping out items (energy, food) or subsituting items (hotdogs instead of steak)to keep the CPI lower than it is. The Stock Market is daily manipulated by the President’s Working Group on Financial Matters. And people are worried about Charlie Sheen?


    • Greg

      Yes Otter, I agree with you. It is a smoke and mirror economy.

  10. oladyinashu

    wow this is the best blog…i love it when i come across a good article and great comments too …so far ..all of the previouse comments are dead on. especially ‘ron’…you go boy.

  11. Keith

    I was somewhat shocked that even the WSJ was spinning the unemployment numbers when they came out. Can’t dig up the exact wording because the recycle-truck already came this week, but the headline was clearly worded to sound like good news, but the real story was that if participation in the labor pool was the same as it was at the end of ’07, meaning the same number of people were either working or actively looking for a job now as were then, then the number would be over 11%. It took some explaining to my wife before she could understand, and she’s a smart gal and GM of a small business.

    • Greg

      My wife was saying the same sort of thing today. Often the head line is positive but the story ends up contradicting it at the end. I find the same thing all the time. Thank you for bringing this up.

  12. lostinmissouri

    I bought into “things are getting better”, a couple of years ago, mainly because I wanted them to get better. (small business owner)

    I do not believe anything the Feds, or MSM, are spewing. The economy can not get better, until the accounting lies, in our financial systems, are corrected. The FASB, is responsible, for allowing the banks, and Federal Reserve, to lie about their solvency.
    (and the government wonders why tax revenues are down, in the face of them saying, things are better.) Go figure!

    • Greg

      Lostin Missouri,
      All you can really do now is keep working on protecting yourself and family. Thanks for checking in.

  13. Martin


    As George Carlin used to point out with great humor there are always two meanings to most words ie. Military Intelligence. Confidence may be the new oxymoron as the inferred meaning today needs another word added to it also –game. If these statistics by the Government are meant to inspire more wild spending and speculation by the American public by building up their confidence, you have to ask yourself -Why?. Isn’t that how we got here? Well-not quite. The Banksters fudged and forged phony loans and then re-packaged them into triple AAA backed credit swaps, all part of a “confidence game” that now includes bank balance sheet rebuilding also part of a “confidence game”.
    The confidence that the U.S. citizen used to have for it’s leaders has been GAMED by useless numbers, manipulation, and outright lies.Unfortunately with 1 out of every 3 Americans on some form of assistance from the Government–any truth teller will be shot just as Kondratief was.


    • Greg

      Maybe I should invest in a bullet proof vest and helmet? Your point is well taken my friend! Thank you for making it here.

  14. Peter


    Since about 1980 -if not earlier- the economics profession has become a religion presided over by the FED as its greatest patron and benefactor. This has led to a strong “group think” of economists who work in academia, government, hedge/mutual funds, large banks, think tanks and lastly, for the FED.
    If you are a well educated economist in order to get a job in one of these areas you must subscribe to the group think. These guys do not write resumes and look for jobs. Most are steered into these jobs by their fellow alumni or the good old boy network.
    This professional capture is so pervasive and so successful in its application, that is seems like most noted economists in their field have really drunk the cool aid. Not a hour goes by in the blogosphere where these cool aid drinking economists are not quoted by someone in the financial reporting area, be they Bloomberg, CNBC, WSJ, etc., on a meriad of subjects from realestate to bonds, stocks, economy, jobs, unemployment, social equality, etc.
    There are few dissenting voices if any. The great majority of the population actualy listens and trust these people. They operate with impunity in a self absorbed and self directed closed loop. No one is allowed in untill they have drunk the waters of the FED.
    I do not see where change will come with all this. I have worked in corporate America for close to 40 years and have seen the distruction that the union of business and government has wrought. For those of you who are under 35 years old, you have no idea of what the American citizen has lost. The WWII generation is gone. Once the much maligned baby boomers are gone you are on your own. Good luck to all.

    • Greg

      You are pointing out a very important point here. Academia played a major role in hoodwinking the American public about the economy. It was a significant part of the Oscar winning movie “Inside Job.” Everyone should see it!! Thank you.

  15. Frankie

    Starvation is coming to the USA.

  16. Sean S

    Good article Greg. The usual high standard we all enjoy reading.

    Everyone should read the many useful articles on Mr. William’s shadow stats site. Unfortunately too many people take “official statistics” on face value without understanding what is in them, how they are collected and how they are compiled. This is what Government wants you to do.

    There are always political pluses in understating unemployment and understating inflation and overstating actual employment levels and GDP growth. Anyone with a modicum of intelligence no longer believes official inflation figures,among others, (because we can experience for ourselves what is actually happening in the real world economy we function in). Yet Government deliberately understates inflation(CPI)(through flawed methodology) and then uses the false understated figure to calculate inflation adjusted GDP growth stats. So when fundamental inflation adjusted GDP growth is released it is overstated as a result of that fudge alone, let alone other factors.

    They all think they are so smart playing these games with the numbers but all they are doing is deluding themselves.

    How then do you properly address economic problems and take responsible and appropriate economic measures when your basic data is so skewed and unreliable?

    Well – you can see the results first hand, can’t you?

    • Greg

      Sean S,
      You are so correct. We can’t fix a problem the government or Wall Street refuses to admit.

  17. Steve A.

    I remember as a small child the slurping sound a straw made then I tried to get the last three drops of coke out of the bottle.

    Now I find the bottle is my 401K and the straw is the corrupt Wall Streeters sucking as much of my sweat equity dollars out of my account as they can.

    Many people pulled out of the market and put their money in ‘certifcates of depression’ at 1-2%. If the Fed can convince them to re-enter the market by giving them confidence with phoney numbers it only gives the greedy blood sucking vampires more to suck out before the big crash.

    God I must be gettin’ old thinking about the ‘good old days’ but this certaintly isn’t the America I was taugh to believe in.

    • Greg

      Steve A.
      You are right on target. I fel the same way.

  18. slingshot

    I often wonder if exposing all this information to the public does any good at all. Like beating a dead horse. Admit it. We have known about all the goofy stats they have been feeding us for years. If something was to be done, you would think it would have been accomplished by now. Inflation, unemployment, debt, energy, housing, interest rates, bonds, savings and all the other categories that affect our lives are way out of line. Maybe by wishful thinking, we can overcome these tribulations but I doubt it. Reading these articles and the comments I would bet that only a small percentage of people, “Get It!”. Fewer even, will stand up against this madness.
    I have been voting for close to forty years and looking back, it appears it didn’t mean a heck of alot. Those in power have managed to put this country in a mess. And we BLINDLY let them do it. Or is it Eyes Wide Open? We need a Bureau of Change, to tell us what all is being revised in Washington, D.C.

    • Greg

      I know how you feel, but I will continue to bang away at them relentlessly. Thank you for your comment.

  19. Lew

    I don’t know how long the American public (at large) will continue to believe the deception of how “well” the economy is doing. Even when the Labor Department was mostly “honest” with us, they admitted that 5% unemployment meant 0%. Just taking that into consideration, can assume that the current unemployment rate is ~ 14%? I agree, government employees will soon (very soon) see their day of reckoning.

    I am currently (under) employed, and make 45% less then I made 11 years ago (in the same position). I have 20 years of technical experience, a BA in Business, a BS in Economics, and finished my MBA in 2008. I have all but given up on finding a more suitable position. I am also 51, and scared to death that I will lose my job.

    This is what mediocrity gives you.

    For anyone that has never read Atlas Shrugged, this would be a good time to do so.

    • Greg

      Thanks Lew for the comment and reading suggestion.

  20. Jan

    I think people are waking up to the phony government numbers. They know thier lives are not improving and in fact are getting much harder. If they believed they would be out spending, but they can’t spend because their paychecks are now barely supporing them.

    They are awake and scared and don’t know what to do. They may not understand all that has happened, but they know the economy is not improving.

  21. Jeff

    My first visit to your website. Great article

    As a guy that is well educated in finance/economics/accounting, your comments of critisism are accurate. In short, continued deregulation by policy makers, the FASB, the SEC contradicts any indication that the economy has so much as even stablllized, let alone spark a recovery. The earnings reported by the banks and many of the largest SEC registrants is primarily due to reserve roll outs from relaxed changes to the valuation and other accounting rules.

    In addition, the decreased unemployment news in January got me started on asking everyone (for the past two months now) if they know
    anyone that was unemployed anytime in the last half of 2010, and is now steadily employed? Do you know anyone who knows anyone? The answer is no.

    • Greg

      Welcome Jeff. Thank you for your perspective on this post.

  22. nm

    Jeff asked:

    if they know anyone that was unemployed anytime in the last half of 2010, and is now steadily employed?

    Yes, I know two people and they both got jobs in Massachusetts. One in IT and the other at a Bio-tech.

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