UNEMPLOYMENT 8.6% REALLY???
The U.S. added 120,000 jobs in November, but the unemployment rate posted a huge drop to 8.6% from 9% and a broader unemployment rate fell even more to 15.6% from 16.2%. Why?
The number of jobs added comes from a survey of establishment payrolls. The unemployment rate comes from a separate survey of U.S. households. The household survey is much smaller than the establishment survey, and as a result it can swing around a lot — and move the unemployment rate up and down when it does.
That volatility is a big reason why economists usually, but not always, pay much more attention to the establishment report.
The unemployment rate is calculated based on people who are without jobs, who are available to work and who have actively sought work in the prior four weeks.
The “actively looking for work” definition is fairly broad, including people who contacted an employer, employment agency, job center or friends; sent out resumes or filled out applications; or answered or placed ads, among other things. The rate is calculated by dividing that number by the total number of people in the labor force.
In October, the household survey showed the number of people unemployed fell by 594,000, but the labor force — the number of people working or looking for work — fell by a little more than half that amount.
That means that though the number of employed people rose, a large group just stopped looking for work.
That could be due to discouragement of the long-term unemployed or by choice over retirement or child care.
So the decline in the unemployment rate to 8.6% was about half due to people finding jobs and half people dropping out.
Dr. Pinna says:
We are talking about 0.4 percent. Unemployment was 9.0 percent, and now is 8.6 percent. The difference: 0.4 percent. Half because of employment and half due to people dropping out. Half of 0.4 equals 0.2. Therefore the “real” new unemployment is 8.8 percent, and not 8.6 percent.
Why does the government use such a fake system? Because a crooked government wants to re-elect a crooked president. It is quite easy to understand.
If the voting public sees the unemployment situation as improving they will vote Obama hoping to keep the trend going.
There is a trend of unemployment…
It is going up.
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