Births/Deaths Model Adjustments and the distortion of Payrolls data

Attached is a link to Mish Shedlock's latest blog  that discusses the 38% rise in business bankruptcies in 2009. The below table is attached from Mish's blog.

For those that aren't aware the Births/Deaths Adjustment is an estimate of the net jobs created/lost as a result of the forming of new businesses and closing of others. The bottom numbers on a month by month basis are most critical. In January 09 there was a large negative adjustment (-356K) for the previous years overly rosy projections of job gains as the recession was going through its early stages.

With a 39% increase in bankruptcies for 2009 versus a Births/Deaths model adjustment of a net 1.179M job GAINS between February and December what do you think the chances are of another adjustment to the January 10 data that will come out in February? (N.B we will still have to probably endure another positive print for the December numbers first which come out tomorrow)

Either the BLS is outright manipulating the data or they have learnt nothing from the mistakes they made in 2008.

I will leave it to the reader to decide.....

One final thing the reader may like to be aware of is that following the release of the January 2009 payrolls data on February 4 2009 the Dow declined a shade under 20% over the course of the next month to its March 9  low.

The two may not be related but one should be at least aware.

Pleading for sanity

Here is an interesting article from Mish Shedlock of www.globaleconomicanalysis.com on the parlous state of the US housing market.

Credit is contracting faster than Helicopter Ben can print it, now if the banks just marked to market perhaps we will see some temporary sanity prevail & maybe just maybe the S&P 500 will no longer be priced on 100x earnings and with the destruction in the USD money supply as a result of this credit contraction perhaps we may even see a reversal of fortunes there.

Bob Prechter of Elliot Wave Bullish on US Dollar

http://www.elliottwave.com/freeupdates/archives/2009/11/17/U.S.-Dollar--Flies--A-Blip-or-Start-of-Something-Big.aspx

Bob Prechter's market timing has been pretty good in the past. He called the market bottom in March and called for a multi-month rally to a target of DOW 10,000. Well we are now around that point.

Offsetting the predicted weakness in the DOW and other major equity market & commodity indexes is an expected appreciation in the USD.

Those of you who missed my earlier post on my personal views on the US Dollar can find out more here