Unemployment Undefined

October 18th, 2011
in econ_news

Econintersect:  Depending on who is defining what unemployment means, there are different answers.  The Bureau of Labor Statistics (BLS) has different criteria but most only use the popular BLS  U-3 unemployment rate of 9.1% for the period ending 30 September 2011.

Now, according to Gallup (hat tip to Business Insider):

Unemployment, as measured by Gallup without seasonal adjustment, is 8.3% in mid-October -- down sharply from 8.7% at the end of September and 9.2% at the end of August. A year ago, Gallup's U.S. unemployment rate stood at 10.0%. While seasonal hiring patterns may explain some of this improvement, the drop suggests the government could report an October unemployment rate of less than 9.0%.

Follow up:



 

Headline unemployment numbers do not measure new entrants into the market.  Econintersect uses the BLS employment to population ratios to gauge the real unemployment.  It seems ludicrous that new entrants to the market, or the long term unemployed - are not counted as unemployed.



 

Employment to population ratios have been falling steadily since 2000 - and depending which base you select - the headline unemployment rate should be between 11.5% and 14.7%.  There is little evidence that this population to employment ratio is improving. There is evidence that unemployment payments for many are expiring - and these are no longer considered unemployed.

Headline unemployment numbers do not measure the real unemployment crisis in the USA.

Note: Another GEI News brief discusses the poor correlation between the Gallup unemployment number and the official unemployemnt from the BLS (U.S. Bureau of Labor Statistics).

source: Business Insider, FRED










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