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July 3, 2008

Real Unemployment is Close to 10%

by Dan

From the US Bureau of Labor Statistics’ June report on unemployment, it’s clear that unemployment is much higher than is being reported. That is, it’s clear if you read the report yourself instead of relying on the news media to do it for you.

If you count people who’ve given up looking for work and people working part-time who’d prefer to work full-time, then the unemployment rate rises to 9.9%. Mish’s comments are telling:

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, etc., you get a closer picture of what the unemployment rate is. The official government number remained 5.5% after May’s huge jump, but U-6 (the most inclusive number) rose .2 to 9.9%. To the average Joe on the street unemployment feels more like 10% than 5.5. Both numbers are poised to rise.

There have been six consecutive months of job losses totaling 438,000 jobs (dead link). The economy needs to create 150,000 jobs each month to keep up with the number of new job seekers. So there are roughly 1.3 million more people looking for work now than 6 months ago.

Not a good trend, and I believe it will continue for some time.

UPDATE: Fixed the number on new jobs required each month.

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