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June USA "real" Unemployment Rate stubbornly slides to 16.5% ... from 17.4% in October

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Today's headline USA Unemployment Rate for June may be 9.5% (U-3), but the dire state of the economy is reflected by the REAL Unemployment Rate of 16.5%.  The latter includes discouraged/marginally attached workers and economically necessitated part-timers.  It's down from 16.6% in June and marks the lowest rate since the Recession-inspired high of 17.4% set October 2009.

The post Great Depression high for this Bureau of Labour metric (U-6) was 19.3% in 1982.  The all time record of 24.9% was set in 1933.  By 1937 it had corrected to 11%, but in a 1939 premature effort to balance the Budget, suffered a relapse to 17.9%.

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 22 months after NBER-declared end of the 2001 Recession.  It never got back to the pre-contraction level of 6.8%.  Assuming this Recession ended July 2009, then U-6 topped three months afterwards "this time".

But just as it was thought the fiscal stimulus was ushering in a robust Recovery, December's leading indicators began to hint of relapse ... perhaps one to three years off.  By February 2010, the "downturn" was starting to look more like a double-dip.  And by March, it became apparent whatever was on the horizon wasn't a year off any longer.  The TrendLines Recession Meter gives guidance on the economy's history and path forward.

Upon resumption of the business cycle and folks commence to come back into the labour market, the statistical U-3 universe will expand.  Due to the larger denominator, it is common for U-3 to temporarily mask the better times, and the Rate may in fact rise.  With that paradox, the Real Unemployment Rate (U-6) may actually start to decline first and hence reveal the first signs of better times.



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