There's a saying about the malleability of statistics: there are "lies, damn lies and statistics". Only by discounting a large number of discouraged job-seekers can the government report a statistical reduction of unemployment, in stead of an actual reduction of employment.
The labor non-participation has reached a record 88 million. The issue of how this rate the unemployment rate is officially calculated is becoming a part of the political discourse. A Republican congressman Duncan Hunter (R-Calif.) intends to press GOP leaders to include the number of individuals who gave up looking for work in the percentage of jobless claims.
For example, the most recent unemployment rate released on Friday, at 8.2% unemployment, is the so-called U-3 rate calculated by the Bureau of Labor Statistics (BLS). It also calculates more inclusive measures U-5 and U-6. The more realistic U-5 rate of 9.6% it includes the “total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force."
Thus, the measure proposed by Representative Hunter would not require any additional numbers to be calculated; it would simply elevate the statistic that the BLS already calculates each month. That would add a lot of realism to the discussion, and not allow the statistical unemployment rate to decrease, while the number of actual employed people is falling.
The lack of realism in official statistics is obscuring not clarifying the direction of the economy. The Dow ended below 13,000 and logged its fourth straight daily loss. One of the reasons may be that during the weekend the traders had a chance to reevaluation the latest unemployment report, which was released last Friday. The stocks tumbled heavily at the open, clawed their way up to recover some ground, then finished near their lows by the end of the day.
|Yes, you did, Barry.|
Barack Obama has been the undertaker of this economy, but he refuses to accept any responsibility. It's time for him to ask: "Did I do that?" ask Steve Urkel from TV show Family Matters used to do after causing some mishap. He won't. So, I've asked and will now answer:
"Yes, he did."