Economic Charts

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Wednesday, April 6, 2011

The Unemployment Situation

I regretfully have been too busy to get data in on time these days (due to very little time), but I wanted to at least review the past month unemployment data from a higher level view.  The reported U3 (measures only the number of officially unemployed) the rate moved down from 8.9% to 8.8%.  What does this mean?  Well as this does not take the number that has fallen out of those eligible for unemployment and they are not counted.  U3 also does not take into consideration many other factors that U6 does.  U6 (measures officially unemployed, Marginally attached workers, Discouraged and Part time for economic reasons) was down from 16.8% to 16.5%.  But U6 still does not take into account those that are not counted, for a more accurate number we take U6 plus the number that are unemployed, but not counted, that want a job now and get a rate of 20.6% down from 21.0%.  Still there are those that are not counted and have totally given up, which none of these numbers represent, but we will go through more.  On the surface the unemployment rate does look better than it did (so this was an improvement), but with some caveats.
Figure 1. Unemployment Rate

Figure 2.  Other factors 

Notice in figure 3 the labor force participation since 2007 has been doing nothing but going down, and has somewhat evened out of late.  The general trend though is is down though and will have to continue to be monitored as the unemployment rate is released month by month.  If the unemployment rate goes down (good sign), but the labor participation rate continues to plummet then things are not improving.
 Figure 3. Labor Participation rate since 2007

Figures 4 and 5 have a very telling story to understand.  Figure 4 shows the civilian labor force that has been on the rise from 2001 to its height in 2008.  Now it is moving sideways to down since 2008, but notice figure 5 shows those not in the labor force still rising sharply.  So, while prior to 2008 we have been expanding the labor force, so seeing those not in the labor force rising is understandable as the job market has become tighter (more people).  But now that employment has slowed down considerably, those not participating in the labor rate (not counted in the unemployment numbers btw) it is still rising sharply.  We need to keep an eye for some reversals in trend here to truly embrace a recovery in jobs.  Now I am all about supportive correlations and as we saw in the food-stamp assistance numbers they increased again in the month of March supporting the fact that more are not able to make ends meet with part time jobs or unemployed and not counted.  Now Food-stamps did slow down in the month of March in terms of growth compared to February, but the number continues to grow and we need to see those numbers reverse.
 Figure 4. Civilian Labor Force

Figure 5.  Not in Labor Force

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