Unemployment getting close to Depression figures when comparing apples to apples

Discussion in 'Economy' started by ScreamingEagle, Jul 1, 2009.

  1. ScreamingEagle
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    ScreamingEagle Gold Member

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    The latest unemployment numbers just came out, and they weren’t too good. Job losses, which had been slowing down for over a month, increased in speed again. The official unemployment rate, standing at 9.4%, looks set to increase when next released in early July.

    But 9.4%, while bad, isn’t that bad, right?

    After all, the Great Depression famously saw 25% unemployment at its height in 1932 and 1933. So this recession is bad, but nowhere near a depression… correct?

    Sadly no.

    You see, during the early years of the Clinton Administration, the way we measure unemployment changed. Discouraged workers – those waiting out the bad times – and the chronically unemployed – those who haven’t held a job in the past year – were dropped from the list.

    Also, the underemployed were no longer counted. That means those with part-time work who wanted or needed to work full-time, couldn’t find better jobs. They might be paying the interest on their credit cards working nights at Denny’s, but they still need more work, and can’t find it.

    Here’ what the new numbers mean to you and an easy way you can protect your portfolio from a prolonged economic downturn…


    Same Unemployed, Three Different Numbers

    All these categories of unemployed mentioned above were erased from the official unemployment rate – which the Bureau of Labor and Statistics (BLS) calls the U-3 rate. The BLS still uses a broader categorization of rates, which attempts to incorporate the underemployed workers back into the equation.

    That rate? It’s called the U-6, and it stands at 16.4%.

    That’s closer to the way we measured unemployment in the 1930s. But it still hasn’t gone all the way.

    Economist Walter J. "John" Williams, graduate of Dartmouth’s MBA program and economic consultant to Fortune 500 companies, was invited to speak to the House of Representatives last year. His website, shadowstats.com, attempts to calculate economic figures in a manner consistent with past measurements.

    For his unemployment charts, he adds in the last uncounted segment of unemployed workers – those who have been out of work for over a year. The range he’s arrived at, as of June 5, 2009?

    Over 20%.

    Frankly, it doesn’t matter how we count our unemployed – until we compare numbers to the past. But we’ve simply got to compare apples to apples to make real sense of the data.

    And when economists throw the 9.4% official rate against the 25% rate of the Great Depression, they are being ingenuous at best.

    The truth is, we’re somewhere between 16% unemployed, and the low 20s which isn’t too far off from that 25% rate. And knowing that the number of people losing jobs is still increasing, is very sobering fact.

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  2. Toro
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    Toro Diamond Member

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    Williams is simply wrong, for a number of reasons.

    First and foremost is that the composition of the labor market has changed.

    This data only goes back to WWII, but as you can see, the percentage of the employable population that is employed is far higher now than it was in the 1940s

    [​IMG]

    If you were to extend this data back to the 1930s, the ratio would have been either the same or lower than it was in the 1940s.

    The reason why the percentage has risen so much is because women entered the workforce. When comparing unemployment during the Depression, women would not have been included in the workforce data when calculating unemployment because they weren't in the workforce.

    Thus, Williams is correct in that we are comparing apples to oranges, but not in the manner he suggests. If you adjusted for all the women who were not working during the Depression, the unemployment would have been far higher than 25%. Thus, making the comparison of today to the 1930s is a specious comparison.

    BTW, I've seen two signs at fast food places looking to hire people over the past few weeks. You can get jobs if you are not picky, at least where I live. That wasn't the case in the Depression.
     
  3. Care4all
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    Care4all Warrior Princess Supporting Member

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    isn't the definition of a Depression just a prolonged Recession, regardless of what percentage unemployment gets up to?
     
  4. ScreamingEagle
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    ScreamingEagle Gold Member

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    Wouldn't Williams have known about the women figures? If they left out the non-working women in the 1930s count but included them in today's figures since most women work....wouldn't that have equalized things out percentage-wise in the comparison?
     
  5. Meister
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    Meister VIP Member Supporting Member

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    Under the obama administration numbers mean nothing anymore except that his likeablity is still high in the polls. That's the only number that counts, it's all about "hope and change". Besides...it's "Bush's fault" that these numbers are where they are, right? As long as a democrat is in office of the presidency, he can do whatever he wants...because they have the power and the conservatices just need to get over it because they lost the election.


    That's really it isn't it?
     
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  6. Toro
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    Toro Diamond Member

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    No, not necessarily.

    Here is another question. There are hundreds of Ph.D.s who work calculating all these statistics. Do you think they aren't aware of what Williams is arguing?
     
  7. Big Black Dog
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    Big Black Dog Gold Member Supporting Member

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    Obama's wonderful stimulus spending is going to kick in any minute now (especially all the jobs created by the Green Industry) and there will be no more unemployment in the US. In fact, there will be great jobs for all the illegal aliens. Don't know who will pick all the veggies then... Be patient. Obama loves us and will take good care of us all... He's our Sugar Daddy. Now, aren't you glad you voted for him?
     
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  8. WillowTree
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    WillowTree Diamond Member

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    oh! we still hope! for change? :lol::lol: better throw in a healthy dose of :eusa_pray:
     
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  9. ScreamingEagle
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    ScreamingEagle Gold Member

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    praytell.....to Jesus or Mohammed? :bowdown: :lol:
     
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    Last edited: Jul 1, 2009
  10. ScreamingEagle
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    ScreamingEagle Gold Member

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    I'm sure they are.

    But Williams says he is including those who were dropped from the unemployment figures under Clinton...such as the underemployed, the discouraged waiting out the bad times(the U-6 rate as compared to the U-3 rate) and those who've been out of a job for over a year...a total measurement which brings today's unemployment rate to 20%...and more similar to the way rates were measured back during the Depression years...

    ...I'm no PhD statistician but that seems a fairly reasonable assessment...
     

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