The Economy–Significant Job Losses: “Jobs Contract 15th Straight Month; Unemployment Rate Soars to 8.5%” says Mish’s headline over at globaleconomicanalysis.blogspot.com today.
Under the section heading “Grim Statistics” the article notes: “The official unemployment rate is 8.5% and rising sharply. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped (from) the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is …labeled U-6. It reflects how unemployment feels to the average Joe on the street. U-6 is 15.6%. Both U-6 and U-3 (the so-called ‘official unemployment number) are poised to rise further.
Looking ahead, I expect the service sector to continue to weaken. Mall vacancy rates and a huge contraction in commercial real estate is finally started. There is no driver for jobs and states in forced
cutback mode are making matters worse.
Unemployment is a lagging indicator, it is likely to continue rising until sometime in 2010.”
Under the section heading “Depression Level Statistics”, Mr. Shedlock offers this opinion: “I consider these job losses to be depression level totals. Admittedly conditions are not as bad as the great depression, but this is certainly no ordinary recession by any economic measure including lending, housing, bank failures, jobs, the stock market, commodity prices treasury yields etc.”
Prudent Home Concerns: Here are a couple of concerns we have here at Prudent Home;
- Increased cost of food later in the year
- Increased gasoline and diesel costs later in the year
- What appears to be an increasingly fragile social fabric here in the U.S.
- Less resources at the individual state’s level for essential services
- Increased joblessness in a context of the things above leading to civil unrest
We hope that our concerns are groundless but just in case they have some merit, keep your eyes on the horizon; the weathers changing fast.
The U3 and U6 published by the government are bad enough, but they are cooked to look better than they really are. For example, after a year of not finding work, a discouraged worker is magically no longer considered discouraged and is dropped from the unemployment statistics. Each administration, both red and blue, has added an ingredient to the recipe.
For an attempt to uncook the statistics, see shadowstats.com. The “SGS Alternate” uncooked U6 is 20%, even grimmer than the official U6 of about 16%.
Many other government economic indicators are similarly cooked (some much worse). Shadowstats attempts to unravel them all.