November 2012

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FEATURE SECONDARY MARKET Situation Room The The presidential debates spawned upheaval over the recent Employment Situation report, but there's little truth to the "truther" movement. By Mark Lieberman T country's economy continues nationwide. And the results from the most recent Employment Situation report, which showed that the U.S. unemployment rate dropped to 7.8 percent, initiated a new political dispute surrounding what's fact and what's fiction in interpreting the significant statistics. hough debates between the candidates for the U.S. presidency are already in the his- tory books, the critical, controversial con- versation on the present and future of the ment rate drop when payroll em- ployment barely budged? That's the question that should be on Employment Situation, compiled monthly by the Bureau of Labor Statistics (BLS), marked the first sub-8 percent unemployment rate since January 2009, and the 0.3 percentage-point drop was the largest month-to-month decline since January 2011. However, statistics also demonstrated that the decline in the unemployment rate was accompanied by a mod- est 114,000 increase in payroll employment. So, why did the unemploy- Findings from the latest 76 | THE M REPORT the minds of analysts, politicians, and mortgage industry experts, but instead, the economic and housing finance "debate" has fo- cused largely on the individuals presenting employment-related arguments—and how little they seem to understand about the report. The unexpected drop re- corded in the bulky Employment Situation study immediately gave birth to so-called "truthers," who alleged the books were "cooked" and that the number had been manufactured to benefit President Obama. But hair-trigger "truthers" didn't add to the body of knowledge regarding the na- tion's unemployment data—they simply created more confusion by misinterpreting the statistics, showing incompetency or a belief that the American public is inca- pable of reviewing the analysis in a meaningful way. The real truth is that the two pieces of data—the unemploy- ment rate and change in payroll employment—are unrelated. What's worse is that the evi- dence emphasizing the disparity is contained in the report itself— albeit tucked away in boilerplate. The legitimate answer regard- ing the question of an improving unemployment rate accompanied by a less-than-expected uptick in payroll employment could be found in the footnotes, or through a simple examination of two other pieces of data: the number of multiple jobholders and the level of self-employment. The most confusing factor—the anemic growth in payroll jobs— can be explained by the recorded increases in self-employment, since a self-employed individual falls under the radar of BLS' current employment statistics (CES), which surveys only a sampling of businesses that have filed unemployment insurance The most confusing factor—the anemic growth in payroll jobs— can be explained by the recorded increases in self-employment. SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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