Simon Maierhofer
The unemployment picture painted by today’s jobs report headlines is much rosier than reality. Still, they were enough to provide a serious pop for stocks. What are the real numbers and will reality seriously ding the market?
How do fish get caught? They open their mouth. How do investors get ensnared or misled? They believe in non-existent phenomenon like a “jobless recovery.”
Surprising as it is, for nearly a year, investors have shrugged off mounting jobless claims and rising unemployment as an ingredient that is not really required for an economic recovery.
In reality, real unemployment is at 17.9%, 0.1% short of last month’s all-time high. Yes, 17.9%! This is the official number reported by the Bureau of Labor Statistics (BLS).
The BLS publishes different sets of data on a regular basis. The main focus tends to be on the U-3 unemployment rate (currently 9.7%, seasonally adjusted).
U-3 is the “official” unemployment rate and illustrates total unemployed persons as a percentage of the civilian labor force. Another category – U-4 – includes unemployed workers plus discouraged workers. A discouraged worker is someone who’s available to work but has stopped actively seeking for work.
U-5 unemployment includes the number of unemployed workers, plus discouraged workers, plus marginally attached workers. A marginally attached worker is someone who is able and willing to work but is not actively seeking work.
U-6 is as close to the real unemployment figure as government reporting gets. This number includes unemployed workers, plus discouraged workers, plus marginally attached workers, plus workers that are forced to work part-time because they are not able to find a full-time job.
According to the Bureau of Labor Statistics, the number of U-6 unemployed workers is 17.9% (not seasonally adjusted – 16.8%, an all-time high). More...
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