Jul 02
Real Unemployment at 16.5%
Posted by Kristjan Velbri | Posted in General | Posted on 02-07-2009
Here’s a nice graph from EconomPic Data blog plotting U3 (receiving unemployment payments) and U6 (includes part time workers that want full time jobs and discouraged workers that have stopped looking but will take a job if offered), which gives a far more accurate picture of the severity of the depression.
Once the unemployment payments expire (they last around a year depending on where you live), the government statisticians will lower the U3 number. Now, in essence, this is not so bad because comparing the U6 and U3 figures gives you some sense of how many of those workers are newly unemployed and how many of them are permanently unemployed. But beware of the financial news media as they usually only give reference to the lower, id est U3 figure. This creates a possibility that we might see a ‘recovery’ in the U3 figures simply because the unemployment payments will expire. But this is no recovery at all – it is only a recovery in the sense of U3, which does not give you the whole picture. The workers will still be kept track of in the U6 figures, but not in the widely cited U3 figures. Watch out for any recovery in the years ahead, because most likely it will be a false alarm.
[...] 800,000 jobs have been created this year, many of them in the finance and construction sectors. The Obama administration said the jobless rate would top out at around 8%, but it’s 16,5% already! This is all public information, but for some reason there still are people like Mr. Morici who [...]
[...] the broader unemployment rate is at 16.8% (data here). If you’re confused about U-3 and U-6, you should read this. The depression has thrust America way back into the year 2000! And even the people that have a job [...]