True Unemployment Rate Is Not Reflected in Government Numbers 13 comments
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Job losses continue to accelerate as thousands of workers lost their jobs yesterday.
The latest numbers include:
Job losses for the day totaled 17,600. Compared to 65,000 job cuts Tuesday and considering that 143 million people are still employed in the US labor force, Wednesday’s job loss may seem minor. Nonetheless, at a rate of almost 18,000 layoffs per business day, the annualized total of job losses in 2009 would amount to 4.5 million jobs. Total job losses last year came in at 2.1 million.
Companies that announce layoffs of up to 20% of the work force are not just fine tuning. The size of the job cuts being announced imply that businesses see an unprecedented and major reduction in future sales and profits.
Despite the obvious increase in job losses, official government estimates may be drastically understating the true unemployment rate. Consider the following:
The Birth/Death Model Defies Economic Reality
The birth/death adjustment made by the Bureau of Labor Statistics added over 900,000 new jobs last year when computing the unemployment rate. The model attempts to estimate new job formation caused by the birth and death of businesses. The model admittedly produces inaccurate numbers at economic turning points but we are far beyond that point. Last year’s addition of jobs based on the model were ridiculous and had zero correlation with economic reality. Accordingly, the official government statistics understated the unemployment rate last year due to the birth/death model distortions.
True Unemployment Rate May Be Twice The Government Numbers
The official unemployment rate may also be dramatically inaccurate based on the Bureau of Labor Statistics method of calculation. Consider the chart below from Shadowstats.com.
If the government was still calculating the unemployment rate using the same criteria and methods that had last been used during the Clinton administration, the “official” unemployment rate today would be closer to 18%.
Courtesy of Shadowstats.com
The SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated “discouraged workers” defined away during the Clinton Administration added to the existing BLS estimates of level U-6 unemployment.
The economy is always about jobs. Regardless of the method of computation, the unemployment rate is growing dramatically. As the effects of layoffs and deleveraging continue to ripple throughout the economy, expect to see an official unemployment rate of over 10% in 2009.
Stock position: None.
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> jack
All the argumentation about the BIRTH/DEATH model is useful to correct the actual level of the RED LIGNE in the SGS`s graphic! The RED LIGNE is understated by official data! Sure, if you correct the actual level of the RED LIGNE the other lignes will UP and the total unemployment will rise dramatically and will stay well above the 18%. I think that the real unemployment of USA is well above of the official data... social disruption is before us!
Excuse my english. Thanks
Government statistics are massaged to present a less-depressing picture of our national environment. We all know that. But what's messed up is that our high schools are only graduating 2/3rds of students and many who do graduate are socially graduated. They are not up to high school graduate standards, which used to mean something in the past. It means increasing numbers of young Americans are eligible for welfare, fast food, retail, and other service-oriented jobs. (I know welfare is not a real job, I'm just sayin'.)
Sadly, our unemployment figures is no longer a measure of jobs nor is it a measure of quality jobs.
CONSUMER PRICE INDEX
Our government no longer measures the CPI as inflation and the cost of living, it measures it as a cost of survival using substitution, geometric weighting, and disgustingly messed up hedonics.
This information needs to be disseminated among the online portals that the unemployed youth visit. I'll do my part.
If the government was still calculating the unemployment rate using the same criteria and methods that had last been used during the Clinton administration, the “official” unemployment rate today would be closer to 18%.
IF THIS IS TRUE........... then surely this is a hugely newsworthy item of GREAT interest.
Can someone please go into the details of if this statement is accurate and true.
I for one love to read of lies told by the political self serving .. the more the finger is scientifically and factually pointed the better quality of leadership we are likely to get.
HOWEVER I DONT READ A DETAILED EXPLAINATION FEEL THIS SENTENCE IS A FABRICATION AS WELL.
thanks
Commentators often want to compare today's unemployment to that of the Great Depression, but are unable to. Economists immediately point out that these figures are calculated far differently now than then, so no meaningful comparison can be made.
Fortunately, because of protections put in place by the New Deal as a result of the Great Depression, we now have counteracting forces that automatically kick in like unemployment insurance, etc. Otherwise, we would already be in a far worse, even dire, situation.
Agree or disagree with the reasoning, the move of a million or so into the employed category was statistically the same as the sudden creation of that many new jobs, so the unemployment statistics became irrationally more exuberant sometime in the 1980s. You'd have to subtract however many active duty military there are today from the official number of employed persons and then recalculate the percentage to get the pre-Reagan comparative number.
As far as Clinton-era changes, the only one I remember is the end of "welfare as we know it," the lifetime limit of 5 years of federal aid. That would have had the effect by the late 1990s of driving more people into the labor pool, but I don't know how many. Our small-city newspaper had stories for a while of women with toddlers who had to take jobs but could not find daycare for the little ones; minimal-cost, sliding-scale daycare was supposed to be part of the deal, but adequate funding never came through.
Former mothers on welfare moving into the workforce would have the effect of raising the unemployment rate, though. What changes took place in the Clinton years that artificially lowered the rate?
I am still calling for a top to bottom investigation of the BLS, starting with the Commissioner Bush "appointed" in 2007.
One-Simple-Idea.com/Ne...
Yet, Congress just gave itself its 10th raise in 12 years, and a $93,000 increasein each members petty-cash budget. Cha-Ching.
At any rate, the voters have the <u><b>gove... that the voters elect, and <u>re</u>&... and <u>re</u>&... and <u><b>re&l... , . . . , at least until that finally becomes too <u><b>pain...
On Jan 29 11:50 AM HEARTSFORLOVE wrote:
> you write .....................
> If the government was still calculating the unemployment rate using
> the same criteria and methods that had last been used during the
> Clinton administration, the “official” unemployment rate today would
> be closer to 18%.
> IF THIS IS TRUE........... then surely this is a hugely newsworthy
> item of GREAT interest.
> Can someone please go into the details of if this statement is accurate
> and true.
> I for one love to read of lies told by the political self serving
> .. the more the finger is scientifically and factually pointed the
> better quality of leadership we are likely to get.
> HOWEVER I DONT READ A DETAILED EXPLAINATION FEEL THIS SENTENCE IS
> A FABRICATION AS WELL.
>
> thanks
U-6 is the right answer, and most accurately reflects actual unemployment. However, this too is susceptible to political manipulation.
www.bls.gov/news.relea...
On Jul 02 11:34 PM DORAKE57 wrote:
> HEARTSFORLOVE******** ANYONE WHO IS UNEMPLOYED AND NOT DRAWING UNEMPLOYMENT
> BENEFITS IS NOT COUNTED. IS THAT DUMBED DOWN ENOUGH FOR YOU TO UNDERSTAND...
> IF A PERSON WORKS 1 HOUR PER MONTH THEY ARE CONSIDERED EMPLOYED..........
>