Unemployment: Let’s get real
Poor Harry Reid. You can understand why Rush Limbaugh calls him “Dingy Harry”. For a public servant of many decades who is supposedly practiced in the art of public speaking, he sure can mess it up. Today I assume he was trying to tell us that the 9.7% unemployment rate that the government claims and the number of unemployed reported this week didn’t go up as high as expected. This is how it came out:
“Today is a big day in America. Only 36,000 people lost their jobs today, which is really good,” Reid said Friday on the Senate floor.
I’m sure those 36,000 are just happy as can be about that, Mr. Reid.
But as most informed folks know, that 9.7% figure doesn’t really reflect the full extent of unemployment. The government’s “U-6” number is much closer, but isn’t used because – well, take a look and you’ll figure it out for yourself:
The U.S. jobless rate was unchanged at 9.7% in February, following a decline the previous month, but the government’s broader measure of unemployment ticked up 0.3 percentage point to 16.8%.
Despite the Obama administration claim today that those measures they’ve put into place appear to be working, the U-6 says otherwise:
The comprehensive gauge of labor underutilization, known as the “U-6″ for its data classification by the Labor Department, accounts for people who have stopped looking for work or who can’t find full-time jobs. Though the rate is still 0.6 percentage point below its high of 17.4% in October, its continuing divergence from the official number (the “U-3″ unemployment measure) indicates the job market has a long way to go before growth in the economy translates into relief for workers.
Here’s the key and a reason you should take all this happy talk with a grain of salt:
A U-6 figure that converges toward the official rate could indicate improving confidence in the labor market and the overall economy. This month pushes convergence even further away.
And it “pushes convergence … away” by a significant amount.
One of the things to be wary of is the administration will start believing its own press and at the first sign the U-3 begins to dip, figure it can begin to further its tax and spend agenda. Until you see the U-6 headed in the same direction as the U-3 and showing significant drops, nothing is getting better on the employment front. And until that happens, the recovery is not going to “take off”.