Mar 04 2011
True Unemployment Still Over 10%
Don’t let the latest unemployment numbers get you too giddy – they are not all that good. First off, 8.9% still sucks – as does the 15.9% full unemployment number which combines all the people not working at their full capacity.
The problem is that this long and deep recession chased a lot of people out of the workforce, so they don’t even get counted any more. If you look at the decadal trend line for the US Work Force we see that the low unemployment number is biased downward because the work force number shrank. There not fewer people needing jobs, there are just fewer people working or trying to work and therefore just not being counted in the equation. [click to enlarge]
The red line shows where the workforce should have been under normal economic conditions. The last census clearly showed a growing population – which means a growing workforce. But the measured workforce numbers (shown in blue) indicate a serious statistical discrepancy. The annual February work force level from 2001 to 2011 has actually dipped significantly since the recession and remains below the normal level.
Since the population has not shrunk during this period this means the unemployment numbers are skewed by missing individuals in the count. About 2.8 million of them (making this anything but round off error or statistical noise). When folded back into the calculation, the actual unemployment level is 10.4%, with the full unemployment number (U6) actually at 17.2%. A tiny improvement from January – but still an economic mess.
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Sic Transit Glory
and meanwhile, while the numbers are being faked in Washington, NASA’s latest climate research launch has failed.
http://www.bbc.co.uk/news/science-environment-12644800
I know this seems provocative – but NASA seems to have taken on a collective culture of failure, and is only capable today of producing failure. When a private company does that it goes bankrupt. What do we do about a publicly owned operation that is incapable of anything but bungling anymore?
Nothing I can see gives me any indication that this can be reversed with the current management structure.
The numbers are all being fudged. There was an article the other day at Morningstar which revealed that if the CPI were calculated today the same way it was prior to 1983 (i.e. during the dreaded high inflation of the Carter years) today’s official rate would be 8.9%!!!! Whether the Fed intentionally rigged the calculation for political purposes (the method was changed in 1983 and again in 1990) or if this is another case of ivory-tower intellectuals being too clever by half is not the issue; regardless of the reason, the Fed is basing its decisions on their current dubious “low” CPI result and happily printing money to “create jobs”, confident that their foolishness is not causing inflation because their bogus numbers don’t show it. But their policies and that of the Obama administration are NOT creating jobs so they are doing their damnedest to make it appear so. It’s reminiscent of the Soviet-era joke about then-premier Leonid Breshnev as a passenger on the stopped train: when the conductor asked what they should do, Breshnev replied “close all the shades and pretend we’re moving.”
PS: Hi-speed rail – Obama closes all the shades and pretends he has the money to built it.
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Wilbur – you hit the nail on the head. And if Unemployment was calculated the way it was in the 30’s, we would be at 17.6%.
An entire generation seems to have decided that “well, we can’t fix the problems, so let’s just pretend they’re not there and hope no one notices.”
How they changed the inflation numbers – they decided that Food and Energy shouldn’t be added in. I guess they don’t think people really use much of either.
I thought that President Obama has saved us all from “falling off a cliff”. I guess now that we have been saved, all we need to do is set the cruise control.