12/05/2010 10:13 pm ET | Updated May 25, 2011

Jobs Shocker: Fact or Fiction?

It was big news over the weekend, front-page coverage everywhere -- the unemployment shocker. That was Friday's dismal November jobs report of a spurt in the month's unemployment rate to 9.8% from 9.6%, an obvious sign of more economic distress.

But how real were those numbers that came from the Bureau of Labor Statistics, which reported the creation of just 39,000 jobs, versus a widely expected addition to the employment rolls in some quarters of about 150,000 workers?

Could the BLS report, like the illusion of a pool of water in the steaming desert, have been a mirage?

The answer is an emphatic YES from TrimTabs Research, a West Coast liquidity tracker partially owned by Goldman Sachs whose TrimTabs clients include many of the country's top hedge funds.

The way TrimTabs figures it, the economy actually produced 117,000 new jobs in November, 78,000 more than what the BLS reported.

Why such a disparity? As, Madeline Schnapp, TrimTabs economics skipper explains it, it's a reflection of the radically different methodologies used by the two to determine the actual employment numbers. For example, the BLS derives its numbers through an incomplete, frequently revised survey, whereas TrimTabs' figures are based on the taxes paid by all employees whose wages and salaries are subject to with-holding.

Noting that the BLS is afflicted with the dilemma of having to make seasonal adjustments when it comes to issuing jobs numbers -- which is especially difficult at this time of the year because of the heavy temporary retail hiring -- she views its November report as a seasonally-adjusted fluke. "It's like trying to hit a needle with a sledge hammer," she says. "It ain't easy."

Schnapp further believes the BLS numbers may also be fouled up because the agency failed to recognize that retailers hired their year-end workforce earlier this year than last year it did last year because of this year's earlier launching of holiday sales. "We suspect," she says, that October employment growth (a higher than expected 151,000 jobs) borrowed from November."

The BLS, which tells me it's sticking by its November figures, is notorious for revising its monthly jobs numbers both up and down in ensuing months. And that's precisely what Schnapp predicts will occur again with regard to the November report. In this case, she sees a sharp upward revision closer to the Trimtabs numbers.

Interestingly, last Thursday Automatic Data Processing reported its closely watched monthly employment figures, which for November were closer to TrimTabs numbers than those of the BLS. ADP reported 93,000 new jobs, driven by growth in small business hiring.

Schnapp rates the November employment showing (her estimated 117,000 job creations) as "okay, but not great," noting a considerably higher number of new jobs (150,000 to 200,000 a month) are needed to keep pace with new entries into the work force.

In recent weeks, a fair number of economists, given perkier retail numbers, including lively auto sales, and somewhat more positive consumer sentiment, have upgraded their GDP growth forecasts for 2011 to between 3% and 4%. The thought of a double-dip recession seems to have largely gone the way of the rotary telephone.

Schnapp doesn't share this ebullience. Her outlook: GDP growth next year will muddle along at about 2.5%, largely due to the drag from housing, the financial woes of local and state governments and a consumer population that is deleveraging.

"We're not on the road to a robust recovery, no way and not on your life, but stuck in a low growth mode for at least another year," she says. "And don't ignore the potential shockers, such as a spike in the price of oil, Iran going nuclear or North Korea attacking South Korea.

As for the stock market, Schnapp sees a ho-hum 2011, with the S&P 500 (currently around 1,225) trading sideways in a narrow range of say 1,050 on the downside and 1,225 on the upside. In other words, a go-nowhere stock market; so don't be hot to trot.

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