Implied Unemployment Is At 11.4% or Worse If Truth Be Told

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Zerohedge - the chart shows what the real unemployment rate would be using a realistic labor force participation rate. To get that Zerohedge used the average rate since 1980, or ever since the great moderation** began. As it happens, this long-term average is 65.8%. We then apply this participation rate to the civilian noninstitutional population* to get what an "implied" labor force number is, and additionally calculate the implied unemployed using this more realistic labor force. We then show the difference between the reported and implied unemployed. Finally, we calculate the jobless rate using this new implied data. As of December, the real implied unemployment rate was 11.4% (see chart) - basically where it has been ever since 2009

Jobless claims rose more than expected (wow, what a surprise, imagine the government reporting rosy numbers?) and retail sales were only .1% If the unemployment is bad enough, it looks better because they stop reporting people who are unemployed longer than 12 months. So, you see, the worse you are, the better you look.

Nasdaq reported: Initial jobless claims rose by 24,000 to a seasonally adjusted 399,000 in the week ended Jan. 7, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires had forecast claims would rise by 8,000 to 380,000. For the week ended Dec. 31, claims were revised to 375,000 from an originally reported 372,000.

The four-week moving average of new jobless claims, which smoothes out volatile weekly figures, increased last week by 7,750 to 381,750.

They’re always volatile if you notice. It’s never that they deliberately overstated the numbers.

The overly optimistic job figures reporting goes on week after week and then the numbers have to be adjusted downward. So how is it that the unemployment numbers are improving as the Obama WH claims?

It certainly helps that the WH only counts the unemployed of the last 12 months and we all know that many people have been unemployed longer than that.

The Bureau of Lying Statistics or BLS (Bureau of Labor Statistics) regularly fudges the numbers by not counting people as they drop out. Some try to say many are retiring but the facts do not bear that out since there is an overall rise in the general civilian non institutional population (all labor force data for every working being excluding jail birds, dead people and so on).*

So how do we find out what the real numbers are when the BLS will not accurately calculate those long term unemployed into their stats?

Zerohedge has one approach which computes a realistic “implied” work force based on reporting methodologies used in the past, prior to the great moderation.**

Take a look at the chart above which shows what a real unemployment rate would be using a realistic labor force participation rate.  An average labor force participation rate since 1980 would be 65.8%. Applying this to the civilian non institutional population, one gets an “implied” labor force number or what it should be based on reality. Then one can calculate the implied unemployed using this more realistic labor force.

Comparing the difference between reported and implied gives a realistic jobless rate of 11.4% from the implied data.

Using the BLS miscalculations, when the labor force hits 58.5%, there will be no unemployment, just in time for the election. Read more: Zerohedge

In 1994, the government decided to ignore long term unemployed when reporting unemployment numbers – the long term unemployed simply don’t exist unless you go to the BLS (Bureau of Labor Statistics) and look at the entire chart. The government still has the info, but they don’t report it as the actual unemployment rate.

 

*According to the BLS, the civilian noninstitutional population consists of persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities and homes for the aged) and who are not on active duty in the Armed Forces. 

**In economics, the Great Moderation refers to a reduction in the volatility of business cycle fluctuations starting in the mid-1980s, believed to have been caused by institutional and structural changes in developed nations in the later part of the twentieth centur Sometime during the mid-1980s major economic variables such as GDP, industrial production, monthly payroll employment and the unemployment rate began to decline in volatility. 

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