Why the Unemployment Rate Has Become a Bad Joke

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  1. #1
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    Why the Unemployment Rate Has Become a Bad Joke






    The national unemployment rate is becoming an increasingly meaningless statistic when it comes to painting a true picture of economic and job growth. While the December drop from 9.4 percent to 9.0 percent might have looked nice on paper, digging through the real numbers shows the actual jobs picture hasn’t improved at all.

    In fact, the situation is at best stagnating, despite headline numbers that look like things are getting better.

    At the heart of the unemployment rate deception are the nearly three million Americans counted as “marginally attached” to the labor force.

    Those folks would take a job if offered but actually aren’t actively looking and thus not counted in the government’s official statistics. There are a million more of them than there were in January 2008, thanks to the lousy job market that seems to be improving only at the margins.

    So when you see a “drop” in the unemployment rate, like we did when the January nonfarm payrolls number came out, it’s best to measure carefully the grains of salt with which one takes the official government numbers.

    “This is a significant number of people waiting on the sidelines,” Paul Ashworth, chief US economist at Capital Economics in Toronto, wrote in a must-read analysis of the labor force’s participation rate.

    “Considering that there are about 7 million more unemployed now than three years ago, it suggests the pool of available labor could be 15% bigger than the unemployment figures suggest,” he concluded.

    That puts the headline unemployment rate well north of 10 percent, even as the so-called “real” unemployment number—which takes into account an even broader swath of the working-age population—remains above 16 percent but in a modest decline. In fact, Ashworth attributes the drop from the cycle high of 10.1 percent unemployment to the current level “as much due to a contraction in the labor force” as any illusory improvement in the real jobs picture.

    “The 836,000 decline in the labor force since (the October 2009 peak) is only slightly smaller than the 930,000 increase in employment,” he wrote.

    “Over the second half of last year, the labor force shrank by more than employment expanded. …In other words, the drop in the unemployment rate doesn't reflect an improving job market, but rather a decline in the labor force participation rate.”

    In fact, the participation rate is shrinking, not growing, falling to 64.2 percent, which is an eye-popping 26-year low. That trend makes it even harder to reconcile a drop in the unemployment rate, and also makes laughable the protests of some economists that the paltry 37,000 nonfarm job growth for January was due to weather.

    Economists who have held bullish outlooks for the economy are taking notice.

    “Never before has such a sharp decline in the unemployment rate been predicated on an ongoing drop in the labor force. The participation rate has crumbled 1.5 (percentage points) since the recovery began,” Bank of America Merrill Lynch economists Neil Dutta and Ethan S. Harris wrote in a research note.

    “This labor force detachment tell us two things that should give even the most bullish of market participants room for pause: (1) structural unemployment is rising and (2) the potential rate of growth in the US is slowing.”

    What’s more, those glibly dismissing inflation threats also could be in for a surprise.

    “More structural unemployment and weak potential growth imply less slack in the economy and raise an inflation risk,” the BofAML team wrote.

    Just today, Neal Soss, head of the economics team at Credit Suisse, said the drop in people looking for jobs is unlikely to abate for years.

    “One arithmetical consequence of a subdued labor participation rate is that it requires smaller job gains to achieve the same amount of decline in the unemployment rate. Thus, the decline in the jobless rate tends to overstate the improvement in the labor market,” he warned clients.

    So what’s it all mean?
    Extrapolating from Soss’s analysis, we should be careful how easily we dismiss future rounds of Fed easing, political climate be damned.

    “The Fed seems to share our concerns about the mathematical calculation of the unemployment rate and is beginning to downplay the improvement in that statistic in its assessment of America's jobs problem,” Soss wrote. “We expect the Fed to maintain its accommodative policy stance until the unemployment rate drops for a good reason: because monthly job gains move to a much higher plateau.”

    http://www.cnbc.com/id/41583533

  2. #2
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    I'll tell you who's fault it is! It's the DAMN BARRY O and his Liberal buddies, that's who!

  3. #3
    wrk'n project mayhem
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    I don't think it was ever a good joke, I know a lot of people out there that are really trying to find a job and can't pay there bills and losing there homes for it.

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    Quote Originally Posted by awhites1 View Post
    I don't think it was ever a good joke, I know a lot of people out there that are really trying to find a job and can't pay there bills and losing there homes for it.
    The metrics they use are not an accurate measure of employment, or fair employment (meaning=2 employment lost)

    Lots of people taking lesser jobs or being re/educated these do not account towards unemployment, but are equivalent in the effect on our economy

  5. #5
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    Quote Originally Posted by Big Pimpin View Post
    The national unemployment rate is becoming an increasingly meaningless statistic when it comes to painting a true picture of economic and job growth.
    the loss of jobs in the US can be directly attributed to NAFTA and globalization, or the outsourcing of US jobs for higher dividends to shareholders and tax breaks to big corporations.

    lol @ the term "economic growth"....
    William F. Buckley describes a conservative as, "someone who stands athwart history, yelling Stop." - and then proceeds to drag civilization back to times best left in history's dungheap.

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    A lower percentage of Americans held careers last year than at any point since 1983, states USA Today. The total workforce percentage peaked at 49.3 percent in 2000, however last year's 45.4 percent total is a sign of the dismal nature of the job market. In addition, only 66.8 percent of males were employed in 2010, the lowest figure on record.

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    the worlds economy is not looking right. ..it's not too bad in oil producing states here though.

  8. #8
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    Quote Originally Posted by Big Pimpin View Post
    The national unemployment rate is becoming an increasingly meaningless statistic when it comes to painting a true picture of economic and job growth. While the December drop from 9.4 percent to 9.0 percent might have looked nice on paper, digging through the real numbers shows the actual jobs picture hasn’t improved at all.

    In fact, the situation is at best stagnating, despite headline numbers that look like things are getting better.
    I agree, Big Pimpin.

    The UE rate is a big joke. Conveniently calculated to push the number as low as possible by the gov.

    But there is great news on the employment front!

    ------
    McDonald’s hiring day draws crowds, high hopes


    Thousands show up to restaurants nationwide to apply for jobs at hamburger giant

    By CHRISTINA REXRODE
    The Associated Press

    McDonald's Corp. for years has fought back against critics who complain it's making people fat. On Tuesday, it went on the offensive against those who assail it as a lousy place to work.

    Thousands showed up to restaurants nationwide to apply for jobs
    on the hamburger giant's first National Hiring Day, creating lines at some restaurants. The world's largest burger chain planned to use the day to add 50,000 new workers.

    Entire: http://www.msnbc.msn.com/id/42662755...consumer_news/
    It's an accurate statement that our current spending will not be increasing the debt We've stopped spending money that we don't have.

    -- Jack Lew, then director of the Office of Management and Budget, in Feb. 16, 2011 testimony before the Senate Budget Committee.

  9. #9
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    Quote Originally Posted by LAM View Post
    the loss of jobs in the US can be directly attributed to NAFTA and globalization, or the outsourcing of US jobs for higher dividends to shareholders and tax breaks to big corporations.

    lol @ the term "economic growth"....
    For once I agree with this communist. Globalization and "free" trade have done nothing but allow for the raping of the manufacturing sector outsourcing of jobs from the USofA. Our so called "free" trade agreements with other countries simply allows them to freely sell their goods in the US while they tariff the shit out of our stuff in their countries (i.e. China). One of the few good things Potus Hussein has done since being anointed was slapping a tariff on Chinese tires.

    What's the worst thing that might happen if we started adding a 10-20% tariff on Chinese products or Jap & Germ cars? We might actually have an industry come back here in the USA. Wouldn't that be terrible!!

  10. #10
    Is Doin It 4 Da Shorteez
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    Quote Originally Posted by GearsMcGilf View Post
    For once I agree with this communist.
    businesses lobbying for special privileges from government is not a free market society....you may want to refresh your knowledge of free market economics with some reading..
    William F. Buckley describes a conservative as, "someone who stands athwart history, yelling Stop." - and then proceeds to drag civilization back to times best left in history's dungheap.

  11. #11
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    Quote Originally Posted by LAM View Post
    businesses lobbying for special privileges from government is not a free market society....you may want to refresh your knowledge of free market economics with some reading..
    We all wish we could be as smart as you LAM, the idea we could have an original thought must just chap your ass to no end... Why don't you speak with your representatives and get them to "educate us" as we are apparently retarded compared to you. Since you know best and so does your party, you go right ahead and solve all our problems with that buddy of ours big government, just turn on the printing press and solve all our problems.
    AY Fan Club President.

    "Damn, sometimes I think you guys make being stupid seem like a skill set." - Troubador

  12. #12
    Is Doin It 4 Da Shorteez
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    Quote Originally Posted by oufinny View Post
    We all wish we could be as smart as you LAM, the idea we could have an original thought must just chap your ass to no end... Why don't you speak with your representatives and get them to "educate us" as we are apparently retarded compared to you. Since you know best and so does your party, you go right ahead and solve all our problems with that buddy of ours big government, just turn on the printing press and solve all our problems.
    the education system in the US is a dismal failure when you combine that with certain religions, unhealthy diets and a lack of exercise you end up with a society of people who in general are not very bright and easily manipulated as intelligence is mainly an inherited trait.

    People in the US have forgotten that words mean things, I will elaborate.

    Simple – Readily understood with limited components.

    Complicated – Not simple but knowable. Interactions can be somewhat controlled. Results including cause and effect can be reasonably predicted by experts.

    Complex – Not simple and never fully knowable. Multiple moving and interacting parts, contexts and factors. Situation difficult to predict and is best understood in retrospect.

    people in Western society are in awe of things that are complicated, let alone things (such as economics) that are both complicated and complex in nature. this causes people to pull away from learning about these things in fear of being labeled "stupid", etc. if they can not comprehend such concepts. people don't ask simple questions which would or might allow them to have a better understand of things.

    mass ignorance about language and words in the US is what allows politicians on both sides to PREACH free market principles while we PRACTICE a managed market economy.

    so you can call me whatever you want, label me whatever you want. one thing I'm not is ignorant to the reality's of the world that we live in.
    William F. Buckley describes a conservative as, "someone who stands athwart history, yelling Stop." - and then proceeds to drag civilization back to times best left in history's dungheap.

  13. #13
    big for a notbig


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    I don't have problems finding a job. And I've been fired from more than a couple in my day. I got an interview tomorrow at a factory for a job startin at 10.85/hr with overtime "to be expected" I'm gonna be rollin in the dough...never made more than 9.25/hr and that was ball busting landscaping. I might end up droppin out of school if I get enough OT
    Cumming day and night.

  14. #14
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    [QUOTE=LAM;2269568]the education system in the US is a dismal failure when you combine that with certain religions, unhealthy diets and a lack of exercise you end up with a society of people who in general are not very bright and easily manipulated as intelligence is mainly an inherited trait.

    People in the US have forgotten that words mean things, I will elaborate.

    Simple
    AY Fan Club President.

    "Damn, sometimes I think you guys make being stupid seem like a skill set." - Troubador

  15. #15
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    Quote Originally Posted by LAM View Post
    businesses lobbying for special privileges from government is not a free market society....you may want to refresh your knowledge of free market economics with some reading..
    You should consider doing the same. Since you're so upset that the rich aren't paying enough taxes, before voting in 2012, you might want to talk to the Potus that you seem to adore so much to find out why his bed buddy, Jeffrey Immelt, CEO of GE, earned 5 billion in profit for his company, yet GE paid $0 in taxes. I'm sure this must be keeping you up at night. So, please explain to us how this is the GOP's fault, as I'm sure you will.

  16. #16
    Is Doin It 4 Da Shorteez
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    Quote Originally Posted by GearsMcGilf View Post
    You should consider doing the same. Since you're so upset that the rich aren't paying enough taxes, before voting in 2012, you might want to talk to the Potus that you seem to adore so much to find out why his bed buddy, Jeffrey Immelt, CEO of GE, earned 5 billion in profit for his company, yet GE paid $0 in taxes. I'm sure this must be keeping you up at night. So, please explain to us how this is the GOP's fault, as I'm sure you will.
    I've stated time and time again that Obama is no different from the rest, and this problem started long ago when the SEC was formed. with the Democrats in charge it's a walk to the inevitable Banana Republic in the US with the GOP in charge it's a sprint....
    William F. Buckley describes a conservative as, "someone who stands athwart history, yelling Stop." - and then proceeds to drag civilization back to times best left in history's dungheap.

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