What is the "REAL" unemployment rate? Not the bogus BS given out by this Administration.
Has the 'real' unemployment rate actually fallen to 8.5%?Topics: Political News and commentaries
The Wall Street Journal says the unemployment rate drop to 8.5% is real, but is it really? Is that the whole story?
As Conn Carroll explains at The Examiner, if we had the same labor participation rate today that we did when President Obama first took office, our unemployment rate would be 10.9% instead of 8.5%. This enables Obama to take credit for a falling unemployment without actually creating the jobs previous administration's needed to achieve similar results.
[...] Since September of this year, the unemployment rate has fallen half a point, from 9%, while the U.S. economy has added only 400,000 jobs. But, according to the Federal Reserve, the U.S. economy must add more than 110,000 jobs a month for the unemployment rate just to keep up with population growth. So if job growth is at a point where we should only be treading water, why is the unemployment rate falling so fast?Carroll has more here.
The answer is that more and more Americans aren't looking for work. Our unemployment rate is not dropping due to job creation, it is dropping because more and more Americans are leaving the workforce. Between December and November, 50,000 Americans dropped out of the civilian labor force. That number was even higher between October and November when 120,000 Americans stopped looking for work.
When President Obama was sworn into office, there were 154.2 million people in the United States labor force. Today there are only 153.9 million. If we had the same labor participation rate today that we did when President Obama first took office, our unemployment rate would be 10.9%.
So, what's our actual jobless rate? As Tyler Durden explains at Zero Hedge, with a realistic labor force participation rate its at 11.4%:
... the BLS constantly lowers the labor force participation rate as more and more people "drop out" of the labor force for one reason or another. While there is some floating speculation that this is due to early retirement, this is completely counterfactual when one also considers the overall rise in the general civilian non institutional population. In order to back out this fudge we are redoing an analysis we did first back in August 2010, which shows what the real unemployment rate would be using a realistic labor force participation rate. To get that we used the average rate since 1980, or ever since the great moderation began. As it happens, this long-term average is 65.8% (chart 1). We then apply this participation rate to the civilian noninstitutional population to get what an "implied" labor force number is, and additionally calculate the implied unemployed using this more realistic labor force. We then show the difference between the reported and implied unemployed (chart 2). Finally, we calculate the jobless rate using this new implied data. It won't surprise anyone that as of December, the real implied unemployment rate was 11.4% (final chart) - basically where it has been ever since 2009 - and at 2.9% delta to reported, represents the widest divergence to reported data since the early 1980s. And because we know this will be the next question, extending this lunacy, America will officially have no unemployed, when the Labor Force Participation rate hits 58.5%, which should be just before the presidential election.You'll find Tyler's charts here.
But wait ... is the 'real' unemployment rate even worse than Durden's calculations show ... and actually closer to 23%? John William's Shadow Government Statistics explains that it is indeed (click chart to enlarge):
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.
The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics' (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.:
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