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 "Real" Unemployment Rate USA

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The Real Unemployment Rate chart is generally posted to the FreeVenue 90-days after its guidance release @ the MemberVenue
 

 

 

[New!]  monthly update of USA "REAL"  Unemployment Rate

   see also:   Trendlines Recession Indicator  (TRI-USA)

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Real Unemployment Rate:

13.8%  May 2013

13.9%  April 2013

13.8%  March 2013

~ ~ ~

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 improves to 13.8% in May

Sept 7 2013 delayed FreeVenue public release of June 7th MemberVenue guidance ~ Today's headline USA Unemployment Rate for May slid back to 7.6% (U-3 BLS), but the dire state of the jobless is better reflected by the REAL Unemployment Rate ... 13.8%.  The latter U-6 rate improved from 13.9% in April and is significantly below the Great Recession high of 17.2% set Oct/2009.  That said, today's rate is not even way back to the pre-Recession low of 7.9% (Dec/2006).  To the 11.8 million U-3 unemployed, the U-6 calculation adds the marginally attached:  7.9 million involuntary part-timers (economically necessitated), 0.8 million discouraged souls (no longer looking for work as no apparent jobs) and 1.4 million saddled with school or family responsibilities.

To hold the Unemployment Rate static considering natural growth of the labour force via graduating students & immigration and minus retirements, the current economy must generate 89k/month in net new jobs.  The TRENDLines Recession Indicator suggests this would equate to a 1.1% Real GDP growth pace.  Similarly, UR-3 would rise 0.1%/month in a 0% GDP environment.  Recent progress reflects a highly stimulated economy which is generating 201k/month (avg) net new jobs.  The model projects the glide path of U-6 should see the 11.0% natural unemployment rate (6.0% U-3) achieved by March 2015.  This suggests FOMC will start to raise its key interest rates in Dec/2014.

It may be surprising to find that by some metrics the job recovery has been better this time around than after the 2001 Recession.  But the headway has reflected demographic and cyclical changes in play more so than an improving economy.  Worse, this progress was founded on the five trillion dollar federal deficits and these measures are projected to continue into the next decade w/o abatement.  The TRENDLines Debt Wall model has determined that unless there is a sea change in political leadership with respect to addressing the federal Deficits & Debt, an almost inevitable Austerity Crisis and subsequent Severe Recession will occur in 2024 ... reversing all of the present Unemployment Rate advances.

The main factors adversely influencing Unemployment incl:  (a) Economy mired in a Structural Greater Depression;  (b) Excessive Minimum Wage;  (c) Retiring Boomers;  & (d) Rising computerization & robotics

 Economy Mired in Structural Greater Depression   Viewed thru the prism of Structural GDP, the US economy continues to be mired in the Structural Greater Depression entered in Nov/2006.  SGDP is a metric which via fiscal multipliers discounts the effects of the massive trillion dollar Federal Deficits.  Albeit SGDP improved to -3.4% in May, TRI USA gauges it has averaged a horrific -8.0% over the past seven years ... compared to -9.7% in the 1930-1933 four-year event.

Congress currently faces a Catch-22 dilemma.  To maintain positive Real GDP and the illusion of a healthy economy, it must gradually increase the annual Deficit over the next ten years to $1.4 trillion which causes annual Federal Debt service to rocket to $1.0 trillion from $235 billion today.  As such, Congress is rapidly approaching the day where Deficit & Debt to GDP ratios attain Greece-scale metrics.  Analysis by the Trendlines Debt Wall model suggests this Keynesian measure will induce long-term Treasuries yields exceeding 7%, resulting in an Austerity Crisis and Severe Recession in 2024.  The "real" Unemployment Rate is projected to rise to 15% during that event.

 Excessive Minimum Wage   When the US economy entered the present Structural Greater Depression event in March 2007, the federal minimum wage was $5.15/hr.  Despite the fragile situation, Congress raised it 41% ($7.25) over the next 27 months thereby making millions of then employed and potential hires thoroughly uneconomic ... mostly affecting unskilled blacks and Hispanics. Unintended consequences put the next tier of wage earners ($6-$9) at risk as they demanded the usual premium compensation over the minimum wage earners.  In this light and knowing Structural GDP was still at -4.0% in February, Obama's State-of-the-Union demand for another 24% increase (to $9) bordered on insanity...

 Retiring Boomers   From Jan/2011 and over the following 19 years, ten thousand 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 Labour Participation Rate which has fallen to 63.4% from 67.3% in early Y2k.  The TRI model assumes this metric will decline to 58.5% by 2050.

 Rising Computerization & Robotics   Ongoing productivity gains due to the introduction of computers and software advances in the workplace and the proliferation of robotics in the manufacturing sector have combined to force departmental layoffs with no signs of dissipating...


The post WWII high for the U-6 Bureau of Labour metric is 19.3% in Nov/Dec 1982.  The all time record (25.6%) was set in 1933.  By 1937 it had corrected to 11%, but in a 1938 premature effort to rebalance the Budget, the Rate 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.

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 "Real" Unemployment Rate USA

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( 1989-2013)

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3 ways to join the MemberVenue:

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  Canada Flag
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long-term multi-disciplinary perspectives by Freddy Hutter since 1989
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Last modified: November 03, 2013