Challenger, Why Even Bother?

Don’t you see that the whole aim of Newspeak is to narrow the range of thought?√¢‚Ǩ¬¶ Has it ever occurred to you, Winston, that by the year 2050, at the very latest, not a single human being will be alive who could understand such a conversation as we are having now?√¢‚Ǩ¬¶The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking√¢‚Ǩ‚Äùnot needing to think. Orthodoxy is unconsciousness.” √¢‚Ǩ‚ÄùSyme, in George Orwell’s 1984

The releases that come out that are unquestioningly accepted by the cognoscenti as reportable news never cease to amaze me. Then alas, I have to try and expose it. Such was the case with Challenger, who is supposed to have a handle on the employment picture. I have no idea what kind of black box methodology Challenger and their ilk use, but the results they spew out as legitimate should be discarded by anyone beyond the fifth grade. But no, nobody in the main stream media ever doubts or questions it. It’s just duly pushed out of the colon along with the other Orthodoxy to make its way into more Ministry of Truth rectifications.

The Challenger Report makes the following claim:

Job cuts in the housing-related industries of real estate, construction and mortgage lending surged 346 percent to 21,245 in the first quarter from 4,764 in 2006′s three months, Challenger, Gray & Christmas Inc. said.

Wow, typical of a good propagandist it’s not even rounded off, just two hundred and forty-five at the end, like they nailed it! Then in the same breath we see another outfit, ADP having us believe 128,000 “service providing” jobs materialized just in March with 81,000 of them at “small firms”. Gee I didn’t know Marie Antoinette and her Princesses were double dipping the poodle at the groomer, overtime? Of course ADP did pick up that 22,000 goods producing jobs were lost, which still seem quite understated given the big dip in durable goods orders. I don’t know what these guys are smoking or eating before they enter the “data” into their “models”, but must be stupefying ‘shrooms, or maybe just bogus?

Source: Dallas Federal Reserve

Fortunately the internet has evolved to a point where there is a community of intelligent observers who are independently tracking and verifying this kind of garbage. The problem for shills like Challenger, ADP, the government, Newspeak organizations and Wall Street types is that we are getting better every day. I feel I am at any rate. Finding this 21,245 first quarter number for real estate AND construction AND mortgage lending to be beyond counter-intuitive I turned to fellow blogger Aaron Krowne’s Implode-O-Meter site where I happened to noticed that since year end 49 lenders are shut down or in final death throes.

I went through this list and lo and behold I see regular mention of employees let go, and lots of them, typically in the range of 100-500, but as much as 3,500 (New Century). On average I ballparked it at 400 each, but just try it yourself or get your sixth grader set up with a Big Chief writing tablet to research it, and you’ll see I’m reasonably close. At any rate, the total comes out in the neighborhood of what Challenger claims to be the TOTAL fallout (21,245) from real estate AND construction AND mortgage lending. In fact if we apply a little intuition to this we know from the BLS that about 500,000 people worked in the mortgage industry in 2006. 20% of all originations in 2005 and 2006 were subprime, and in the first quarter 36% of that business disappeared. Without a doubt even more subprime biz is gone now. So Dr. Watson, wouldn’t it be logical to project that 500,000 x 20% x 36%= 36,000 subprime mortgage employees may be kaput? Ok, so not all are gone, as some have been transferred over to the REO Department.

Furthermore, to ignore that and then assume NO construction jobs were lost is simply beyond belief. By taking the housing starts data and doing a six month shift, we can see the impact from the completions of old starts. Sure there may be short delays if homebuilders decide to keep crews around who aren’t working, but I doubt it. In fact I would hazard a guess that many are let go in stages even before completion. Probably too many for Challenger to have a prayer of successfully counting at least in a reasonably timely manner.

In fact even if we take the Census data on housing (which I feel is inflated and will be adjusted down) we see 1,247,000 (seasonally adjusted) privately owned houses under construction at the end of December and 1,211,000 at the end of February, and there is no way March is not lower. Just for the two months that’s a 2.9% housing units decline against 3.3 million in the residential construction field, or 104,000. Finally the last category, “real estate”, I won’t even go there except to put up the last chart. Really Challenger, why even bother?

Lastly, I have pinpointed March as when the recession started, but this is simply the warm up. Perhaps the data dispensers will pick it up two months on down the road with revisions or catch ups. Rasmussen consumer confidence polls picked up a big initial drop. April 4th showed 111.9.

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