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USA's "real" Unemployment Rate

click to enlarge ... more macro economic charts @ my SA Instablog & website

USA "Real" Unemployment Rate declined to 15.7% in March, down from 17.4% high in 2009

"Real" Unemployment Rate:

25.6% - 1933

20.0% ~ 1939

19.3% - Nov/Dec 1982 (post WWII high)

17.4% Oct/2009

16.1% January 2011

15.9% February 2011

15.7% March 2011



July 8 2011 delayed FreeVenue public release of April 8th guidance @ our MemberVenue ~ Today's headline USA Unemployment Rate for January may be 8.8% (U-3), but the dire state of the jobless recovery is better reflected by the REAL Unemployment Rate of 15.7%. The latter includes discouraged/marginally attached workers and economically necessitated part-timers. The rate is down from 15.9% in February but is not

The post WWII high for this Bureau of Labour metric (U-6) was 19.3% in Nov/Dec 1982. The all time record of 25.6% was set in 1933. By 1937 it had corrected to 11%, but in a 1938 premature effort to balance the Budget, suffered a relapse to 20.0%.

This jobless recovery was foretold by Trendlines Research in Autumn 2008. And it seemed the economy was over the hump when it was reported the Inventory/Sales ratio was much improved. As some sectors move to replenish, there is a visible increase in Aggregate Weekly Hours ... then overtime ... and finally re-hiring. The U-6 Unemployment Rate did not peak 'til 23 months after the trough of the 2001 Recession. It never did get back to the pre-contraction level of 6.8%. With the recent Recession ending June 2009, then U-6 topped out four months after the trough "this time".

Failure of the Unemployment Rate to plunge post-Recession in both of the last downturns provided McDoomer with lotsa ammunition for ad nauseum calls for a double-dip. That fate was skillfully thwarted via intervention by Congress & the Fed. The only factor standing in the way of a full Recovery is the will of the USA Gov't to address its Structural Deficits and mounting National Debt. Failure to deal with this fiscal mismanagement may lead to another financial crisis, founded on a devalued Dollar and subsequent higher petroleum prices. The Trendlines Recession Indicator & Debt Meter provide guidance on the economy's path forward.

On resumption of the business cycle, folks commence to come back into the labour market, and the statistical U-3 universe expands. Due to the larger denominator, it is common for the U-3 rate to rise temporarily, masking the better times. With that paradox, the Real Unemployment Rate (U-6) may actually start to decline first and hence reveal the early signs of an improved employment environment.


U-6 definition: Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

really much lower than the Recession inspired high of 17.4% set October 2009.