While the cable news stations play the Ted Kennedy motorcade, there is news out there you should be paying attention to:
Real US unemployment rate at 16 pct: Fed official
The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.
“If one considers the people who would like a job but have stopped looking — so-called discouraged workers — and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.
He underscored that he was expressing his own views, which did “do not necessarily reflect those of my colleagues on the Federal Open Market Committee,” the policy-setting body of the central bank.
Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department’s monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.
Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression.
Lockhart said the US economy was improving but “still fragile,” and the beginning stages of a sluggish recovery were underway.
“My forecast for a slow recovery implies a protracted period of high unemployment,” he said, adding that it would be difficult to stimulate jobs through additional public spending.
“Further fiscal stimulus has been mentioned, but the full effects of the first stimulus package are not yet clear, and the concern over adding to the federal deficit and the resulting national debt is warranted,” he said.
President Barack Obama’s administration has resisted calls for more public spending, arguing that the 787-billion-dollar stimulus passed in February needs time to work its way through the economy.
Lockhart noted that construction and manufacturing had been particularly hard hit in the recession that began in December 2007 and predicted some jobs were gone for good.
Prior to the recession, he said, construction and manufacturing combined accounted for slightly more than 15 percent of employment. But during the recession, their job losses made up more than 40 percent of all US job losses.
“In my view, it is unlikely that we will see a return of jobs lost in certain sectors, such as manufacturing,” he said.
“In a similar vein, the recession has been so deep in construction that a reallocation of workers is likely to happen — even if not permanent.”
Payroll employment has fallen by 6.7 million since the recession began.
And it has further to go, via Ace, New CBO projection: 2.3 million more people unemployed next year than expected:
It’s an average of almost 200,000 more jobs lost every month for the entire year.
And Allahpundit asks,
CBO’s projected average unemployment rate next year is 10.2 percent. How many jobs would we be talking about if they used the “real” unemployment rate, which includes discouraged workers and those who are working less than they’d like? According to the chairman of the Atlanta Federal Reserve, that one currently stands at … 16 percent and counting.
How’s that stimulus working for you?
More,
Over in Detroit, the unemployment rate is a whopping 28.9%.
Fausta, this is amazing and shocking news! Thank you…
I quit looking back in ’03 and became a house-husband.
Unemployment, both in the U.S. and the world as a whole, marches ever higher because the field of economics doesn’t account for the relationship between population density and per capita consumption.
Following the beating the field of economics took over the seeming failure of Malthus’ theory, economist adamantly refuse to ever again consider the effects of population growth. If they did, they might come to understand that once an optimum population density is breached, further over-crowding begins to erode per capita consumption and, consequently, per capita employment.
And these effects of an excessive population density are actually imported when a nation like the U.S. attempts to trade freely with other nations much more densely populated – nations like China, Japan, Germany, Korea and a host of others. The result is an automatic trade deficit and loss of jobs – tantamount to economic suicide.
Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!
If you‘re interested in learning more about this important new economic theory, then I invite you to visit either of my web sites at OpenWindowPublishingCo.com or PeteMurphy.wordpress.com where you can read the preface, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)
Please forgive me for the somewhat spammish nature of the previous paragraph, but I don’t know how else to inject this new theory into the debate about trade without drawing attention to the book that explains the theory.
Pete Murphy
Author, “Five Short Blasts”