It's no lie.

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The Latest Economic Conspiracy Theory

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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Friday’s jobs numbers were big, and the revisions below the surface were huge. Yet even before the release, the birther/vaxxer/flat-earther crowd had warned us about phony numbers. As public policy, this kind of conspiracy thinking can cause the deaths of infants and the elderly. At least in markets, it merely loses you money.

In December, I wrote:

Today’s column is about stupidity. Perhaps that's overstating it; to be more precise, it is about the conspiracy-theorist combination of bias, innumeracy and laziness, with a pinch of arrogance thrown in for good measure.

I am talking about the manifold ways various economic reports get misinterpreted, sometimes in a willful and ignorant manner.

That column discussed some of the sillier theories from within the darker corners of the Internet. Admittedly, these weren’t from influential people or important media outlets; it was the usual collection of oddballs in tinfoil hats.

So I am somewhat amazed that in recent days we are seeing similar idiocy from prominent people with powerful jobs who should know better. What makes these grand conspiracy theories so amusing -- whether it is the moon landing, the dangers of vaccines, or the current economic recovery -- is these people's  naïve belief that they have discovered some great truth. (Actually, that it is news to anyone that the government lies to us about war or NSA invasions of privacy or so many other things is the true surprise.)

Today, I want to discuss not the unwashed masses but chief executive officers and other business leaders. (I give former General Electric CEO Jack Welch a pass because his nonsensical ramblings are so familiar as to be background noise.)

Perhaps the most-discussed recent conspiracy theory comes from Gallup CEO Jim Clifton:

Here's something that many Americans -- including some of the smartest and most educated among us -- don't know: The official unemployment rate, as reported by the U.S. Department of Labor, is extremely misleading . … Right now, we're hearing much celebrating from the media, the White House and Wall Street about how unemployment is "down" to 5.6%.

None of them will tell you this: If you, a family member or anyone is unemployed and has subsequently given up on finding a job -- if you are so hopelessly out of work that you've stopped looking over the past four weeks -- the Department of Labor doesn't count you as unemployed.

Clifton essay is subtly titled, "The Big Lie." Actually, it is something that anyone with even a passing interest in economics knows, even otherwise-ignorant financial TV anchors

Punch into Google the phrase “how is the unemployment rate calculated,” and the very first result is the BLS explainer “How the Government Measures Unemployment.” Under the heading “basic concepts of employment and unemployment,” we get four bullet points that explain the broad concepts of measuring employment:

  • People with jobs are employed.
  • People who are jobless, looking for a job, and available for work are unemployed.
  • The labor force is made up of the employed and the unemployed.
  • People who are neither employed nor unemployed are not in the labor force.

(For a more detailed explanation, Matt O’Brien refers to this section of the same BLS page.)

The conspiracy theorists fail to understand the basics of econometric modeling and how these numbers are calculated. They also seemingly could not conceive that these measures are two-sided -- that this method can drive the unemployment rate up as well as down.

Consider the rise in unemployment in the January nonfarm payrolls report. More than a million people returned to the job market last month, raising the unemployment rate from 5.6 percent to 5.7. 

Hence, we have a deep dark secret. It has been craftily hidden by the illuminati, Freemasons and Trilateral Commission, unless you know the secret handshake, or are familiar with a small, esoteric company called  "Google.”

Regardless, the technical definition of unemployment is well known, and easily discoverable. The only reasons anyone who wants to understand this but does not are: a) ignorance b) laziness c) bias and d) some combination of all three.

Which brings us back to Mr. Clifton of Gallup: How is it possible for the head of a major polling organization to not understand the basics of employment data? Perhaps its time for the company to do its own internal poll: Do we want our organization to be run by someone who seems to have no economic sophistication and is easily taken in by the goofiest of conspiracy theories?

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Barry L Ritholtz at

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Tobin Harshaw at