U.S. Unemployment Statistics Hiding the Dismal Truth
February 3rd, 2009Via: Market Oracle:
All told, 2.6 million people lost their jobs in 2008. And, to underscore the accelerating nature of the problem, more than half of those job losses occurred in the final four months of the year. In December, a total of 11.1 million were unemployed. An additional 8 million people were working part time – up sharply from 7.3 million in November.
The average workweek in December fell to 33.3 hours. That’s the lowest average on record, dating back to 1964, and a sign of more job reductions to come since businesses often cut hours before eliminating positions entirely.
Those are the “official” government numbers. But, as a closer look demonstrates, the unemployment figures can be understated – and misleading.
The government actually compiles unemployment figures in six different categories; as you might expect, the numbers tend to minimize the bad news.
The most commonly number quoted in the media is the “official” unemployment rate – known as U3 (the bottom line of the three in the chart below) – which now stands at 7.2%.
But to get the real picture, you have to add both in what the government refers to as “discouraged” workers (U4) and “marginally attached” workers (U5) – those who have stopped looking for work, or who haven’t looked for work recently (represented by the middle line of the three in the chart). That number (U6) depicts an unemployment rate t that’s approaching an eye-popping 14%.
And it gets worse.
If you include the people that the government doesn’t even count – such as unemployed farm workers, the idle self-employed, and workers in private homes – the unemployment rate approaches an astonishing 18%.
I’m thinking the U6 will be closely approaching 16% by the time this new month is finished. I think of 16% as something of an “alarm-bell” tipping-point because 16 is the first double-digit number you get when you double the number one and then double the number two you got from doubling one and so on, and 16% is pretty close to “one out of six”.