17.5% US Unemployment Rate
November 6, 2009
There’s a bug in the federal government formula for unemployment that is becoming more and more apparent as the current economic crisis continues.
The fact is according to Washington, you are employed even if you don’t have a job. The current U-3 Standard counts individuals that have completely lost their unemployment benefits and still not employed as currently employed and happy.
But according to John Doe’s measure, he’s unemployed until he finds a job.
The current unemployment rate is 17.5% , not 10.2% according to the official measure of the U-6 rate. That’s great depression levels circa 1932, during the depression the unemployment rate eventually hit 25%. Based on our current “growth” rate we might reach that level within the next 900 days.
We have argued time and time again that the U-6 needs to be the official rate.
It’s the closest standard we have (officially) to how it was counted in the 1930’s during the great depression. It’s also a much closer picture of what reality is on the ground. The fact that the U-3 drops people from the unemployment rate when they run out of benefits, not when the find a job is reason enough.
To make matters even more interesting, the government is close to calling the recession over, technically that’s correct.. in reality it’s not even close to being right, because of what they are using as the standard.
In this rough example: Let’s say that in 2006 the economic output of the US was 100, in 2007 it was 90, 2008 it was 70 and 2009 it’s 50. Then early in 2010 it goes to 51 (this is done actually every 90 days, not every year).
Technically on paper the recession is over, we moved up from 50 to 51…. but in reality we are still at half of our economic output of 2006.
90 days is not enough, to mark a recession should be spread out over 2 year marks, not 90 days marks.. to count unemployment it needs to be the U-6 not the U-3.
We are completely being lied to. This recession isn’t close to being over and the unemployment rate is nearly double what is being reported.
Enjoy the lie you are being fed. The problem is that businesses don’t believe the statistics, because if they did they would think the recession is over and be on hiring binge, clearly that’s not happening.
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