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USA's "real" Unemployment Rate

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25.6% - 1933

20.0% - 1938

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

17.4% - Oct/2009

16.1% - July 2011

16.2% - August 2011

16.5% September 2011

Jan 7 2012 delayed FreeVenue release of Oct 7 MemberVenue guidance ~ Today's headline USA Unemployment Rate for September may be 9.1% (U-3), but the dire state of the jobless is better reflected by the REAL Unemployment Rate of 16.5%.  The latter includes discouraged/marginally attached workers and economically necessitated part-timers.  The rate is up from 16.2% in August and is barely below the Recession induced high of 17.4% set October 2009.

As predicted by the TRENDLines Gas Pump & Barrel Meter models, the auto sector rebound was strangled in early February upon gasoline & crude prices breaching $3.26/gal & $90/barrel respectively.  The model reveals surpassing this same Gasoline/GDP ratio threshold Light Vehicle Sales founded collapses in 1980, 1990 & 2007.  The good news is this was just a (predicted) spike and as crude oil heads lower the auto sector should rebound by year-end.

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, it is little reported that U-6 topped out a mere four months after the trough "this time".

Failure of the Unemployment Rate to plunge post-Recession in both of the last downturns provided McDoomers with lotsa ammunition for ad nauseum calls for a double-dip.  That fate was skillfully thwarted in both events via intervention by Congress & the Fed.  The economy has not yet made the transition from "Recovery" mode to "Expansion" of the next business cycle as the pre-Recession 2007 Real GDP high has not yet been exceeded.  The improved TRENDLines Recession Indicator provides 24-quarter 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.  As seen in the chart, only 1971 mirrors the stubbornness of the currently unfolding scenario.

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%.

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.

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