Economic Charts

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Sunday, January 9, 2011

Monthly Unemployment Rate

December's unemployment rate was released yesterday and at first glance seemed to be a better number.  The unemployment rate is a U3 measurement, in other words measures the number of people that participate in the labor force vs. the number of unemployed.  The size of the labor force grows and contracts month to month.  This month the labor force contracted by 317k due to aging population (becoming of age and aging out).  The 99rs no longer qualifying to be counted as unemployed reduced the number of counted unemployed.  This most likely impacted the 634k improvement in the number of persons counted as unemployed.  U6 unemployment (not publicized) does not count the 99rs as well, but does count Marginally Attached, Discouraged and Part time for economic reasons (most of which increased).
Marginally attached workers increased by 78k, Discouraged workers increased by 36k and Part-time for economic reasons decreased by 29k.  Part-time for economic reasons could be decreased due to a policy back in November that the retailers took that part-time employees would be brought on full time (we'll see how long that lasts), so they could not be counted anymore.
To add to this argument against a better unemployment rate I encourage you to read the article entitled "Presto! 9.4% Unemployment! How The Government Lies" by Tyler Durden, guest poster at  Another great breakdown to aid was done by CalculatedRisk entitled "Employment: The Declining Participation Rate", which is a must read.

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