Half the Story

The media published unemployment numbers out today only tell half the story. In case you missed it, 524,000 more jobs lost, with unemployment going to 7.2% (and that is the government massaged number).

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaTj7p_k.QgY&refer=home

Why do I say it is a massaged number? Because the BLS adjusts the number using birth/death assumptions (births and deaths of businesses, not individuals) and these assumptions have been incredulous for pretty much all of 2008.

The 7.2% number is also a bit misleading in other respects too. The number, for example, does not take into account the marginally attached people, i.e. those who want to work but gave up looking for it more than four weeks ago, or the involuntary part-timers, i.e. those wanting full time work but who can only find lower-paying part-time jobs that provide little in the way of benefits. If you look at more comprehensive U-6 number, which includes these other individuals, versus the widely noted "official" unemployment U-3 number of 7.2%, you will see an unemployment rate instead of 13.5%. That, my friends, is the other half of the story. For a very nice detailed discussion of this, I highly recommend Mish's Global Economic Trend analysis.

http://globaleconomicanalysis.blogspot.com/2009/01/jobs-contract-12th-straight-month.html

Note as well that the number of people in the involuntary part-time category skyrocketed in 2008 and now stands at eight million. That is a 3.4 million increase in one year.

http://www.calculatedriskblog.com/2009/01/over-8-million-part-time-workers.html

Disclosures: None.