Tuesday, February 3, 2009
Are We Experiencing Depression-Level Unemployment?
The government bandies around scary figures concerning rising unemployment. But those figures are still well below those suffered during the Great Depression.
Right?
Well, it depends.
The official unemployment reports of the Department of Labor's Bureau of Labor Statistics provide conventional "U-3" figures and various alternative measures including "U-6". For example, as of December 2008, U-3 unemployment was 7.2 percent, while U-6 was 13.5 percent. (U-6 is actually more accurate, because it includes those who would like full-time work, but can only find part-time work, or have given up looking for work altogether).
The U-6 unemployment rate is therefore almost double the more commonly-cited U-3 figures.
But those in the know argue that the real rate is actually higher.
For example, leading economist John Williams and Paul Craig Roberts - former Assistant Secretary of the Treasury and former editor of the Wall Street Journal - both say that if the unemployment rate was calculated as it was during the Great Depression, today's figure would actually be 17.5%.
Indeed, according to an article summarizing the projections of former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart, U-6 unemployment could rise to 22% within the next 4 years or so.
So what are the best unemployment estimates? And where will the unemployment numbers end up?
I'm not sure. But when you scratch the surface of the "official" U-3 figures and measure things the way they were measured in the '30's - and when you remember that the worst unemployment numbers did not occur until 1933, 4 years after the 1929 crash - these sure sound like Depression-level unemployment figures.
Indeed, as shown in this chart, unemployment percentages may already be worse than they were during the start of the Great Depression.
And see this.
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Standards, ya gotta have standards. To use today's government numbers are meaningless because the formulas have been buggered many times.
ReplyDeleteIt's the fashion today to compare this downturn to others for instance "How does this depression compare to 29" To answer that question and you see a lot of hem hawing in the answer because you can't do it using today's numbers.
Fortunatley there is a solution it's called Shadow Government Statistics and their alternate data series is a good place to get comparison numbers for GDP, Unemployment, and other important stuff. It's free and you can see the data here: http://www.shadowstats.com/alternate_data
I live in Silicon Valley. I know lots of people over 50 who cannot find work. I also know two men, one white and one black, recently hired at $12 an hour. They both used to make money in high tech. But immigration has wiped out their chances for a job.
ReplyDeleteIt should be noted that $12 an hour is not a lot of money in Silicon Valley. The last time I looked a 422 square foot studio apartment can be rented for a mere $950 a month. Of course rents were driven up by legal and illegal immigration.
I also met a driver for a document shredding company who told me 60% of their drivers had been laid off permanently. At the other end of the job scale are the illegal aliens who have taken over the construction trade and lots of other jobs in California.
That is why the government under both Republicans and Democrats has refused to report long term unemployment. They need to cover up what legal and illegal immigration has done to harm us. In normal times people over fifty usually are working and making the most money they ever have in all their lives. Now millions of men and women over fifty cannot find work or are working at wages that are beneath what it takes to live.
Very nice blog and very useful information to share whit the readers that's good. depression can be reduce through human growth hormone.
ReplyDelete