Unemployment Rate
Here’s the worst case scenario of the U6 Unemployment Rate, as noted in this Reuters article, Great Depression jobs parallel may not be far flung. I disagree with the article, and believe we are nowhere near depression levels of unemployment.
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The series by John Williams’ Shadow Stats folds back all of the workers who have left the Labor Pool. We do not know how many are actual workers and how many have simply left the labor pool, so that 17.5% number probably skews high.
While I believe the 7.2% unemployment rate is laughably inaccurate, I do not think we are at 17.5% either . . .
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Hat tip Paul
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Source:
Great Depression jobs parallel may not be far flung
Pedro Nicolaci da Costa Reuters
Jan 8, 2009 9:37pm EST
http://www.reuters.com/article/newsOne/idUSTRE5077TM20090109
January 12th, 2009 at 7:02 am
“While I believe the 7.2% unemployment rate is laughably inaccurate, I do not think we are at 17.5% either . . .”
Why wouldn’t you believe the work that John Williams has done? Is your belief based on truthiness?
January 12th, 2009 at 7:18 am
Paul does good work Barry, and is one of the sites I visit frequently besides yours. I also saw this on Cal. Risk this morning and thought that the readers here might like another opinion about where we are in time….
http://online.wsj.com/article/SB123146363567166677.html
OPINION: DE GUSTIBUS JANUARY 9, 2009 ‘Atlas Shrugged’: From Fiction to Fact in 52 Years
I am sure everyone here has read this novel already, so the thoughts about whether this is coming true should be already formed….
January 12th, 2009 at 8:35 am
Intrade depression contract is now near 60% compared to pre US election 5%. Like the Monroes sang “what do all the people know”
http://data.intrade.com/graphing/jsp/timeAndSalesForm.jsp?contractId=647817&tradeURL=https://www.intrade.com
If expectation of a depression becomes widespread it could become self-fulfilling (but aren’t people already saving & scrimping anyway?)
January 12th, 2009 at 8:51 am
@Bruce in Tn:
From the WSJ article/comment that you linked:
The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in “the public interest.”
Except that as was shown here recently, we got a worse deal than Warren Buffett. I’m sure that the six bank presidents are “shaking in their boots” at the “tough” deal they had to suffer at the hands of Hank Paulson. In reality, this faux outrage is just that: fake. The Shock Doctrine is a better explanation for what happened.
And the writer’s proposed answer? Abolish the income tax.
Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax “for purposes of fairness” as Barack Obama puts it.
Next to estate taxes, the income tax is the closest method we have to taxing wealth. You have to pay for government somehow. Abolishing the income tax may be a kind of “economic stimulus,” but it would also lead to injustice. Government, including the courts and regulatory agencies, are designed to equalize bargaining power to some extent. This is ultimately better than revolutions, which will result with too much inequality.
Ayn Rand’s Atlas Shrugged is a work of fiction in every sense of the word. The Randians seem to think that you can shift all the tax burden to the poor and abolish government programs (such as Social Security, Medicare and public education) and the “market” will work out injustice with perfect efficiency. But this is just a fantasy. The lack of government leads to the Bernard Madoffs of the world.
January 12th, 2009 at 9:16 am
Visually estimating the rate of change of U6 vs. U3 and SGS vs. U6 it looks like U6 certainly contains willing workers not covered in U3, it changed with U3 at almost twice the rate. There seems to be a built in offset, but during the 90’s it’s rate droped 2x the U3, and is rising 2x the U3 today.
The SGS Alternate changes at almost the same rate as U6, and has roughly the same slope, I don’t see how this has anything but a perminant offset from U6.
January 12th, 2009 at 10:38 am
Don’t worry people, President Obama will be providing exactly the kind of stimulus we need, to fix the unemployment stats, whether it be 7.2% or 17.5%. Look at what he is going to do for even the small town of Edwardsville, Alabama: http://socialistsatthegate.blogspot.com/2009/01/green-in-alabama.html. Change we can believe in!
January 12th, 2009 at 10:43 am
@OkieLawyer
“injustice”, “inequality”, “equalize” – I just love the way the left twists of language to suit their political and social goals. Add “taxpayer”, “tax cut”, “liberal”, and “progressive”.
Are you really going to proclaim the efficacy and fiscal soundness of government programs like Social Security, Medicare and public education? Sheeesh! And to say the U.S. is suffering from a “lack of government” is hilarious.
Moore is dead on here: “The more incompetent you are in business, the more handouts the politicians will bestow on you.” And I’ll add, the more irresponsible you are as a private citizen, the more handouts the politicians will bestow on you.
In the U.S., if you’re competent, creative, industrious and responsible, you’re now a minority…and you’re screwed.
January 12th, 2009 at 10:47 am
BR; you’re right this is way too much of a stretch. Suggesting unemployment levels are remotely approaching Depression levels belongs with Curveball and his mobile nuclear labs. The real numbers probably in the low teens are bad enough as are all the other figures which were contained in this summary in the WAPO this morning.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/01/12/GR2009011200354.html?sid=ST2009011200359&s_pos=list
January 12th, 2009 at 10:55 am
Tom K Says:
January 12th, 2009 at 10:43 am
@OkieLawyer
“injustice”, “inequality”, “equalize” – I just love the way the left twists of language to suit their political and social goals. Add “taxpayer”, “tax cut”, “liberal”, and “progressive”.
Are you really going to proclaim the efficacy and fiscal soundness of government programs like Social Security, Medicare and public education? Sheeesh! And to say the U.S. is suffering from a “lack of government” is hilarious
Actually Medicare costs much less to administer than private insurance. Do you propose eliminating it along with Social Security which also works just fine and Public Education as well. Why not go the whole hog and return the peculiar institution which would take care of the gardening problem; take the vote away from women they are so irrational after all; indentured labor would solve the servant problem; these all sound like policy proscriptions with great appeal in the 21st century.
January 12th, 2009 at 11:07 am
Breaking News on CNBC: Sir Goldilocks is still “very bullish” on stocks. When this thing crashes again, will he ever go bearish? Will CNBC ever dump this guy? Can one always be wrong and still keep their jobs? Apparently, the answer is, yes, if you’re on the MSM or are a prominent “economist”.
January 12th, 2009 at 12:12 pm
Medicare and Social Security have unfunded liabilities in the trillions. Is this your idea of government programs that “work just fine”?
And who is suggesting “indentured labor”? Wasn’t that Barack Obama? Something about spreading the wealth around?
January 12th, 2009 at 12:34 pm
Can you go into a little more detail as to why you don’t believe 17.5% is realistic. From where I sit, it looks spot on.
Construction projects have slowed significantly or have neared completion. New projects actually in the works seem to be on a sloooow track. Several huge projects are on hold likely to be cancelled. Retail closings in my geographical area are real and significant. I was just at a car dealership – according to one of the salesmen, sales are down 40% and the showroom is dead. Parking lots aren’t full.
No one is selling apples on the street corner. But I think it’s much worse out there than you realize.
January 12th, 2009 at 12:37 pm
“Actually Medicare costs much less to administer than private insurance.”–otto
Does this include the ~30% of their expenditures that, by their own admission, fall under the “Waste, Fraud & Abuse” category?
or, is it, just, more fanciful cherry-picking?
http://www.icerocket.com/search?tab=web&fr=h&q=Medicare+30%25+waste for intro..
January 12th, 2009 at 1:00 pm
People are STILL pumping their credit cards just to get by (as their “safety net”), so until that comes to a screeching halt (that’s the next mess in line in ‘09 after the comm re mess), we won’t see too much carnage but it’s building.
January 12th, 2009 at 2:23 pm
On the topic of “lack of government”, didn’t Mr. Obama just tell us healthcare is a right? That’s wonderful given this report from the NCHS:
“Numbers posted by the National Center for Health Statistics show that more than 34 percent of Americans are obese, compared to 32.7 percent who are overweight.”
http://www.reuters.com/article/domesticNews/idUSTRE50863H20090109?feedType=RSS&feedName=domesticNews
Forget personal responsibility. Big government will come to the rescue with either a mandate on the private sector or another underfunded entitlement program. Eat, drink, smoke, and be merry.
January 12th, 2009 at 3:38 pm
Real unemployment rate is around 11% and should rise to 13%-15% by the end of the year. Unless the Obama miracle happens and we all get sprinkled with magic dust.
January 12th, 2009 at 3:54 pm
This is the hottest video of the day…pardon me if this has already been posted.
http://www.cnbc.com/id/28616631
Bonds Show It’s ‘Ferociously Dangerous’: Hendry
January 12th, 2009 at 6:26 pm
You never say what “you” think the unemployment rate is. Just, that you don’t believe either 7.2% or 17.5%. Whenever I’m confronted with numbers I don’t trust, I split the difference; 12.3%.
January 12th, 2009 at 8:26 pm
Bruce,
this from your link:
“The people who tell you they know what’s going to happen in the next 12 months are either foolish or liars. I’m going to be flexible in my mind and flexible with my portfolio,” he added.
My question is, when are people that ever make claims about knowing what will happen in the next 12 months not foolish or liars. If they do indeed get it right does that mean they “knew”. Look at some that called the crisis, many of them were a year or two early, in the investment world that’s the same as being wrong. Further, being flexible with a portfolio should be a must for any market environment, not just because things are tough right now.
January 12th, 2009 at 8:28 pm
@Mannwich,
that credit card squeeze is coming really soon IMO. I know lots of people that very recently that have had limits cut that never carry a balance and have very high credit scores.
I feel bad for some that are using that as a last resort because it’s going away soon.
January 12th, 2009 at 8:44 pm
@Mannwich: “Can one always be wrong and still keep their jobs? Apparently, the answer is, yes, if you’re on the MSM or are a prominent “economist”?
One word: Weatherman.
January 12th, 2009 at 8:53 pm
Why has the interbank lending rate in Japan gone up .5% y/y?
http://www.rttnews.com/CorpInfo/EconomicCalendar.aspx
Concern about creditworthiness?
January 12th, 2009 at 9:02 pm
@TrickStyle: Good point but their mistakes are generally much less consequential than the MSM and economists…….
January 12th, 2009 at 9:48 pm
OkieLawyer is right.
Tom K: I had a boss like you once. He claimed that all sicknesses were psycho somatic so anyone who called in sick was faking it. It’s just amazing how you people can believe such strange things. Maybe you don’t and you just like to talk BS. You reason with your close randian friends and mock and haughtily dismiss anyone with a shred of human compassion. How’s that job at the penitentiary going?
January 12th, 2009 at 9:57 pm
Let’s just hope we don’t have a dustbowl drought like there was in the 30s.
Granted, there are far fewer people employed in agriculture now, but it certainly wouldn’t help!
January 12th, 2009 at 10:17 pm
Great Depression comparison already laid out…see these 3 commentaries, especially the first one dated November 7th, 2008. http://economicvesuvius.blogspot.com/search/label/Modern-day%20depression%20scenario
January 12th, 2009 at 11:06 pm
@Okilawyer
“The lack of government leads to the Bernard Madoffs of the world.”
How many times was the SEC in their looking at Madoff? And institutions that are proven not to work like the SEC are what you want more of giving people a false sense of security. This false sense of security given by government leads people to not due proper dilligence and allow these frauds to flourish. Same with the FDIC, them backing these financial institutions and insuring deposits allowed these Banks to put risky assets on their books without having them worry about their deposit base leaving.
“Next to estate taxes, the income tax is the closest method we have to taxing wealth. You have to pay for government somehow. Abolishing the income tax may be a kind of “economic stimulus,” but it would also lead to injustice”
We need to reduce govt they have been the problem over the last 20 years be it encouraging everyone to get in a house, FNM&FRE, the federal reserve constantly inflating bubbles, endless wars. When we shrink govt back to levels the constitution intended at that point we could abolish the income tax.
“The Randians seem to think that you can shift all the tax burden to the poor and abolish government programs (such as Social Security, Medicare”
These programs are insolvent what do you not understand about that, the US govt is on the hook for so many unfunded liabilities it is frightening. All of these programs have given americans a false sense of security and instead of living below their means americans have spent every last dime. What do you think is going to happen when the checks stop getting mailed out and those who felt this false sense of security are left with no savings or income at retirement.
January 12th, 2009 at 11:59 pm
Looks like it’s time to pack up the Hummer and head on east out of Californee…
“The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.
The state with the next-highest net loss through migration between states was New York, which lost just over 126,000 residents.”
January 13th, 2009 at 4:02 am
good job on “To The Point” tonight Barry….wonderful apostasy when you suggested liquidation of the IB’s might have been preferable over the wasted bailout billions
January 13th, 2009 at 4:17 am
Ayn Rand is to society as Madoff is to finance.
Eastern Europe sends us 2 rejects, Leo Strauss & Ayn Rand. Upon arriving they size up the rubes and like rug salesmen tell the jerks what they want to hear — like Greenspan. Hey, its better than actually working for a living.
My hope is that Paulson suddenly decides to leave Washington to find that “secret canyon” real soon.
Ok, lets get back on thread. The average joe requires 1400 calories per day for long term survival. If he “leaves” the work force for more than a year you can semantically define him as jobless or not — the definition is not important. What is important is that he is not working, so how does he survive? Given the loss of credit and the drop in lower level salaries (charity from his network), we can say that he has little access to new sources of income. How long will his reserves last?
January 13th, 2009 at 4:40 am
No, we’re not there yet. But the parallels to all the string-pushing that went on in TGD are ominous. And as many have already noted, we have the Fall of the Credit Card looming before us. Also, the Great ARM Scythe of Destruction is still moving forward.
We are about to enter the next turn of the deflationary wheel, where the economy at large shrinks again, the first wave of layoffs and reductions in orders serving to provoke another of similar scale (percentages) but smaller absolute numbers (’cause there are fewer jobs left to lose).
It is interesting this time to see the Hoover role played by a politician who styles himself as another Roosevelt.
And rather than another Dust Bowl, this time we could (could, not might or should) see the Yellowstone caldera erupt and bury the Great Plains in a few feet of ash.
The rhymes that history plays are fascintaing to observe and to try and guess just what unexpected Black Swan will crap on us next.
The more things change … b
January 13th, 2009 at 8:19 am
@Ventura2012:
And institutions that are proven not to work like the SEC are what you want more of giving people a false sense of security.
It is a better explanation that the neoconservatives want government to fail — so it does. The neoconservatives and Libertarians could be thought to say: “I believe that government is corrupt, incompetent, inefficient and ineffective. Elect me, and I will prove it to you.”
What we have seen is something closer to sabotage than incompetence.
When we shrink govt back to levels the constitution intended at that point we could abolish the income tax.
The Constitution of the United States of America
We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare….
While the Supreme Court ruled early on that the Preamble was not part of the Constitution, it is clear that the founding fathers always understood that the government would expand as necessary to serve the interests of the people. Creating an SEC is part of the “police powers” inherent in government. (What part of “establish justice” do you not understand?) This also goes for the FDA, EPA and a whole host of government agencies that insure our quality of life is maintained.
When I go down to West Virginia as part of my job, I see streams and rivers that have orange water. I was told that comes from the coal companies discharging their waste. I hope we get an EPA under Obama that will end that practice. I don’t care if it does cost me more in taxes. I don’t want to drink that sludge! Maybe you don’t want clean water, but I do. Go back to the time of the founding fathers when there was no EPA? Are you nuts?
These programs are insolvent what do you not understand about that, the US govt is on the hook for so many unfunded liabilities it is frightening.
You mean they haven’t been funded yet. The numbers that you are reading use the liabilities, but not the future funds. They also presume models based on economic growth that are below historical norms. (It also presumes that tax rates will stay the same as under Bush. I think this really proves that we cannot afford such low tax rates on the wealthy.) The reality is that we cannot effectively predict the costs 40 years out anymore than we can predict the stock market 40 years out here. Social Security is actually running a surplus and has been for 30 years. It is only because the money has been allocated to other things that any problem could be argued to exist. If there is any problem, we will be able to fix it.
January 13th, 2009 at 9:13 am
Wire story a few days ago quoted 80 year olds saying that today’s situation wasn’t nearly as bad as the Depression, when they had to go without meals as children.
Yesterday, NYT story re: unemployment in NY state. Said thousands of unemployed people are facing end of benefits (having already been twice extended). A man said he was still eating three meals a day, if you include having a soda (and only a soda) as dinner.
At my daughter’s elementary school, five years ago I rarely, if ever, saw a father on the playground afterschool watching a child. Today. I see 5, 6, 7 fathers hanging out.
Barry, you are a good man, but this thing is bad and getting worse.
Geez, the roundtable in the new Barron’s has financial wizards talking about Weimar dollars, hyperinflation, gold coins, and even a reference or two to guns.
January 13th, 2009 at 9:46 am
AGG: You have an strange idea of compassion. Voting for bigger government and using the force of law to plunder from one individual in order to give to another isn’t compassion. Spending money you don’t have isn’t compassion either. Giving of your own time and wealth, freely and willingly is compassion.
OkieLawyer: You’re in denial about the financial status of the big entitlement programs.
http://www.ssa.gov/OACT/TRSUM/index.html
http://finance.senate.gov/hearings/testimony/2008test/020608mltest.pdf
January 13th, 2009 at 11:01 am
OkieLawyer you made me remember a talking point I missed in a post at January 13th, 2009 at 10:36 am in the previous thread
to Big to Fail = to Big to Fight … then again it’s the flip side to that post … lifes pro and cons and the balance
January 13th, 2009 at 11:14 am
this is still a great country
Schoolhouse Rock! The Preamble
http://www.youtube.com/watch?v=ADlL6jjYte8
January 13th, 2009 at 1:23 pm
Ventura,
the SEC worked pretty well for a pretty long period of time. It certainly provided a stronger and more vibrant capital markets environment in the US than existed prior to the SEC.
Perhaps coincidentally, the rash of securities frauds began around the time that Reagan’s deregulatory slash-and-burn measures would have started to have taken effect.
And quite frankly, it is pretty mind-boggling to think that a gigantic Ponzi scheme like Madoff could have occurred were it not for a deregulatory-minded SEC.
January 13th, 2009 at 9:37 pm
@Okie
“It is a better explanation that the neoconservatives want government to fail — so it does. The neoconservatives and Libertarians could be thought to say: “I believe that government is corrupt, incompetent, inefficient and ineffective. Elect me, and I will prove it to you.”
What we have seen is something closer to sabotage than incompetence.”
No libertarian wants govt to fail, we just want it out of our private lives and out of the private market. Libertarians say it is incompetent, inefficient and ineffect, elect me and I will shrink it.
“The Constitution of the United States of America
We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare….
While the Supreme Court ruled early on that the Preamble was not part of the Constitution, it is clear that the founding fathers always understood that the government would expand as necessary to serve the interests of the people. Creating an SEC is part of the “police powers” inherent in government. (What part of “establish justice” do you not understand?) This also goes for the FDA, EPA and a whole host of government agencies that insure our quality of life is maintained.
When I go down to West Virginia as part of my job, I see streams and rivers that have orange water. I was told that comes from the coal companies discharging their waste. I hope we get an EPA under Obama that will end that practice. I don’t care if it does cost me more in taxes. I don’t want to drink that sludge! Maybe you don’t want clean water, but I do. Go back to the time of the founding fathers when there was no EPA? Are you nuts?”
Where does it say in the Constitution that the fruits of ones labor should be transferred to another person? Please point that out to me.
“You mean they haven’t been funded yet. The numbers that you are reading use the liabilities, but not the future funds. They also presume models based on economic growth that are below historical norms. (It also presumes that tax rates will stay the same as under Bush. I think this really proves that we cannot afford such low tax rates on the wealthy.) The reality is that we cannot effectively predict the costs 40 years out anymore than we can predict the stock market 40 years out here. Social Security is actually running a surplus and has been for 30 years. It is only because the money has been allocated to other things that any problem could be argued to exist. If there is any problem, we will be able to fix it.”
We cannot afford low tax rates on the wealthy, lol. Tell me my friend what % of taxes do the top 5% pay. The money put into social security is gone and will not come back. I would much rather take the extra 6.3% I put in as well as my employer does and invest or have to do with that as I please. If you think Social Security will be there in 30 years might I interest you in a nice ocean front condo in Indiana I have for sale. I also know a man who delivers 15% returns every year with an option strategy..might I interest you in that.