November 2012

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 74 of 79

FEATURE SECONDARY MARKET tax returns. The number of self- employed individuals increased 144,000 in September, and to the extent those individuals were tracked in the bureau's current population survey (CPS), they could have correctly described themselves as "employed," even though they wouldn't have been included in the jobs count. Another often-overlooked reduce unemployment, thus contributing to lowering the unemployment rate. And getting back to the issue of the self- employed, figures from January 2011 mirror September's findings, with self-employment rising 139,000, reducing unemployment statistic in the Employment Situation survey is the num- ber of multiple jobholders. In September, the number of multiple jobholders declined; thus, if an individual held two jobs and lost one of them, the number of jobs would go down, while employment and unem- ployment would be unchanged. The number of multiple job- holders declined 55,000 during September without affecting either employment or unemploy- ment, and it could, though, have stunted growth among payroll employment, which would have increased 169,000 if the elimi- nation of 55,000 "second" jobs hadn't resulted in the recording of a (net) increase of 114,000 jobs as reported by the BLS. Statistics for payroll number of people unemployed by the sum of those employed and unemployed, and the rate, which is derived from a sur- vey of 60,000 households each month, is projected through extrapolation to the entire popu- lation. is, in fact, a cumbersome, difficult compilation of data. September's report was 38 pages long and was crammed with in-depth information explain- ing nuances of the economy. So, though mistakes could easily be made, individuals or profession- als choosing to tout or criticize specific figures without working to gain an understanding of such statistics do a disservice to our economy and our country. Another key fact that has gone employment represented the weakest increase in the last four months of the Employment Situation, but in the preceding three, the unemployment rate barely budged, going from 8.2 percent in June, to 8.3 percent in July, and to 8.1 percent in August. The last time the unemployment rate fell by as much as 0.3 percentage points in one month was in January 2011—and guess what: Payroll jobs increased by only 110,000, according to survey figures. (The preliminary estimate of payroll jobs showed an increase of just 36,000, rising to 63,000 in the secondary estimate, before the final revision showed a still- weak gain of 110,000 jobs.) Additionally, in January 2011, the number of multiple jobholders fell 49,000, which meant that each of the newly created jobs—whether 36,000, 63,000, or 110,000—served to relatively unmentioned in the discussion on the Employment Situation report: the certainty that 114,000 new jobs in one month is nothing to cheer about when the over-16 population is growing at the rate of more than 300,000 a month, and the latest numbers seem particularly unim- pressive when compared with an unemployment rate that re- mained under 7.8 percent for the first 95 months of the 96-month George W. Bush administration. Still, history doesn't completely mitigate the positivity associated with the current Employment Situation, given that the rate was previously greater than 8 percent for 43 straight months. However, there remains a ditional would-be economists, there are a few important tenets to note about the Employment Situation reports. First, unem- ployment is a defined term; an individual has to be out of work, available for work, and look- ing for work to be considered "unemployed" by the BLS. As for how the BLS arrives at its findings, the unemployment rate is computed by dividing the without showing up in the payroll report. For "truthers" and any ad- roll jobs comes from a compan- ion survey of businesses report- ing on the number of people on payrolls and paychecks issued during a specific week in the month. Lastly, it doesn't matter if an individual has worked one hour or 40 hours—or more—dur- ing the week; if it resulted in a paycheck, it counts as a job. While the "truthers" got many Secondly, the number of pay- facts wrong in presenting their evaluations, it's worth noting that the Employment Situation looming irony in the "debate" on U.S. unemployment, because the findings can have such a short period of relevancy. By year's end, for example, our rate could easily pop back over 8 percent, as individuals who were on the sidelines start to believe they have better chances of getting jobs and, accordingly, re-enter the labor force as unemployed. Arithmetically, if both the numerator and denominator of a fraction increase equally, the percentage value of the frac- tion will increase. It would be remiss for critics to deny this basic mathematical truth and focus instead on a fairly futile game of who's right and who's wrong, because the only tangible result will be the misdirection of national attention away from what's important: the measures needed to stabilize and improve the employment environment. THE M REPORT | 77 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET

Articles in this issue

Archives of this issue

view archives of TheMReport - November 2012