The U-6 Paints The True Unemployment Picture

Click on the link above and you'll access an article describing the more comprehensive U-6 unemployment indicator, a broader measurement. In addition, you'll find an intelligent graphic which will display unemployment data dating back to 1948.

Education And Unemployment/Stay In School

A Recession Like No Other

Economist In The Closet

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The Fleeting American Dream

Click on the title above to access a sobering article on the prospects for today's millenials. 18-29 year olds find themselves moving back in with their parents with alarming frequency and the optimism of America has faded for them. This article is interesting because it incorporates multi-generational views of the father and grandfather as they struggle with their memories of this country in it's age of decline.

Two Ways To Measure GDP Give Us Two Okun Results

As the last two posts suggest, Okun's famous law appears to be broken. Depending on the definition you trust, Okun's Law claims that every 1% increase above the natural unemployment rate is the result of a reduction in the GDP of 2-4%. The recent independence attributed to the unemployment rate despite growth in the GDP has led some to speculate that the law is obselete. But the fact that the GDP can be measured as spending or income raises the question over which is more accurate. The graphs in the article suggest the income approach to be more accurate and Okun's Law to still be relevant.

A Falling Unemployment Rate Can Be Misleading

The unemployment rate fell in June to 9.5% from 9.7%, reaching its lowest point since last July. But the decline wasn’t due to improvement in the labor market. Instead, jobless Americans dropped out of the labor force in droves.
June’s decline in the civilian labor force of 652,000 was the sharpest one-month decline in 15 years in the Labor Department’s survey of households. Some people could be frustrated with their job searches, choosing to take time off or pursue other options like school. Some could be experiencing the end of their unemployment benefits, which required them to maintain an active job search. Whatever the cause, over the past two months almost one million people simply stopped looking for work. And over those two months, the U.S. population grew by 361,000 — with more than half of that gain coming in June.
The drop of 125,000 jobs in the monthly payroll report, which is compiled from a separate survey of employers, should have led to an increase in June’s jobless rate. The economy generally needs to add at least 100,000 jobs a month — often more — just to keep up with growth in the labor market and keep the unemployment rate steady. In June, people giving up hope and leaving the job market offset that need for more jobs to keep the jobless rate even.
What happens when all those people return? The unemployment rate is a measure of the total number of unemployed people — defined as those out of work but looking for work — as a share of the overall labor force. Once the economy improves, many of those people will restart their job searches and expand the labor force again.
If employers aren’t producing enough jobs to satisfy all that available labor — they probably won’t be — then the overall unemployment rate will rise again. The recent drops in consumer confidence and the recent pace of hiring suggests many Americans won’t be rushing back into the job market soon. That will mean continuing downward pressure on wages — and little underlying inflation.

Structural Unemployment In Manufacturing

Click on the title to go to a great article depicting the mismatch that exists between the demands for labor and the supply of workers in manufacturing. Continued automation and the evolution of manufacturing means that employers are looking for workers with sophisticated skills but the pool is apparently shallow. This is frustrating recovery in that sector.