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"Real" Unemployment Rate

14.4%  December 2012

14.4%  Nov/2012

14.5%  Oct/2012

~ ~ ~

25.6% - 1933

20.0% - 1938

19.3% - Nov/Dec 1982  (post WWII high)

17.2% - Oct/2009  (Great Recession high)

 USA "Real" Unemployment Rate stable at 14.4% in December

April 4 2013 delayed FreeVenue public release of Jan 4th MemberVenue guidance ~ Today's headline USA Unemployment Rate for December may be stable at 7.8% (U-3), but the dire state of the jobless is better reflected by the REAL Unemployment Rate ... 14.4%.  The latter U-6 BLS rate was also the same as November but is significantly below the Great Recession induced high of 17.2% set Oct/2009.  That said, today's rate is not even 1/3 the way back to the pre-Recession low of 7.9% in Dec/2006.  To the 12.3 million U-3 unemployed, the U-6 calculation adds the marginally attached:  7.9 million involuntary part-timers (economically necessitated), 1.1 million discouraged souls (no longer looking for work as no apparent jobs) and 1.5 million with school or family responsibilities.

If there is good news, it is the economy is finally again producing the 103k jobs/month required to keep the Unemployment Rate from rising considering natural growth of the labour force via graduating students and immigration less retirements.  The TRENDLines Recession Indicator suggests a 1.1% Real GDP pace is required to keep the unemployment rates static and those rates would rise 0.1%/month in a nil growth environment.  The model finds the glide path of U-6 should see the 11.0% natural unemployment rate (6.0% U-3) achieved in 2017Q1, an event which will be ushered in by the raising of its key interest rates by the FOMC.  Even this tardy level of progress does not reflect so much an improvement of the wide-spread malaise or a marginally improving economy as it does the realities of an aging society.

From Jan/2011 and over the following 19 years, 10,000 boomers a day started turning 65.  Boomers are the 77 million Americans born 1946 through '64.  The number of people eligible for Social Security will nearly double to 80 million (from 46 million) by the time all the boomers reach 65.  So the big question is: "of the 150,000/month potential, how many are retiring?"  One clue is the falling Participation Rate which has fallen to 64% from 67% in Y2k.  The TRI model assumes it will be 55% by mid-century.

TRI USA provides monthly-updated guidance on the status of the current business cycle with projected baseline GDP thru 2030.  Its current analysis forecasts annual Real GDP is in secular decline and will decrease from 1.9% in 2013 to 1.2% by 2020.  The inability of the current business cycle to get traction if founded on the recent balance sheet recession - a Kondratieff cycle event.  When reconciled for Congress's fiscal policy measure of five massive trillion dollar Deficits, the model concludes the USA entered a Structural Depression in March 2007.

TRI USA gauges Structural GDP plunged to -13.6% in Jan/2009, has since recovered to -4.9% and has averaged -7.1% over the six-yr duration of this event (compared to -9.7% SGDP 1930-1933).  To maintain the illusion of a healthy economy, Congress plans to continue these trillion dollar Deficits decades into the future.  Analysis by my Debt Wall model suggests this Keynesian means of using Deficits to keep Real GDP artificially positive is an unsustainable venture and failing a sea change in political leadership, the practice will be truncated by a Greek-scale treasuries yield (7%) crisis in 2025.

The post WWII high for this Bureau of Labour metric (U-6) is 19.3% in Nov/Dec 1982.  The all time record of 25.6% was set in 1933.  By 1937 it had corrected to 11%, but in a 1938 premature effort to rebalance the Budget, suffered a relapse to 20%.  As seen in the chart, only the 1971/72 event mirrors the stubbornness of the currently unfolding scenario.

U-6 definition:  Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.