Westchester Young Republicans
To Serve the Young Republican Community of Westchester County

State of the Economy

Looks like former GE CEO, Jack Welch, may be correct about the faulty jobs report from last week.

CNBC reports that jobless claims are sliding, import prices are rising and that the trade gap is up!  This does not point towards a strong economy:

The number of Americans seeking unemployment aid plummeted to 339,000 last week, the lowest level in more than four years. The sharp drop offered a hopeful sign that the job market could pick up.

The Labor Department said weekly applications fell by 30,000 to the lowest level since February 2008. The four-week average, a less volatile measure, dropped by 11,500 to 364,000, a six-month low.

Mish's Global Economic Trend Analysis breaks down their perspective on the actual unemployment rate, which is much higher than the Labor Department's stats from last Friday:

Some people in school may want part-time work, but not full-time work.  Others may be working part-time but want a full-time jobs. I would track those categories as follows.

  • U1: Those who want a full time job, are able to work, but are not working.
  • U2: U1 + Those who want a part-time job, are able to work, but are not working.
  • U3: U2 +  Those working part-time who want a full-time job

In my scheme of things, U2 would be the official unemployment rate. Those in school for economic reasons instead of working full-time would fall in the U1 category. My U3 would pick up under-employment.

So what would the "Mish Unemployment" number be?

The answer is the current U5 (9.3%) plus those in school for economic reasons, plus those in forced retirement, etc. I do not have a count of that precisely, but judging from those who dropped out of the labor force, I suspect it would be on the order of 10% to 12% but perhaps a bit higher.

Add in those working part-time for economic reasons "My U3 number" and you are perhaps at 17%.

Those unemployment numbers would be similar to the unemployment numbers in the 1930's.  The state of the economy is not sound.

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commented 2013-12-28 14:33:53 -0500 · Flag
Thank you