The Bureau of Labor Statistics (BLS) announced this morning that its official unemployment rate jumped from 9.8% in September to 10.2% in October. (U6 – the broader measure of unemployment, jumped to 17.5%.) But they continue to rely upon an unexplainable phenomena that I call the “mysteriously vanishing U.S. labor force” to hold down the numbers. In spite of the fact that the U.S. population grew by 263,000 last month, the BLS says that the labor force shrank by 31,000. It seems that, the deeper a recession gets, the more people are suddenly able to thrive without a source of income.
Non-farm payrolls shrank by 190,000 jobs – the headline number in this morning’s report. But the fact is that total jobs fell by 589,000. Once again, manufacturing took the biggest hit.
My calculation of unemployment is based upon the labor force consisting of a steady percentage of the population, which actually correllated very well with the BLS data until the recession yet, at which point the BLS became motivated to sugar-coat the data. Using that method, U3 unemployment has jumped to 11.7% while U6 has soared to 20.9%. Here’s my calculation:
Taken together with GDP data (see “3rd Quarter GDP Up, Erosion in Underlying Economy Continues“), the evidence is clear that the government stimulus program, while propping up the economy, is failing to stimulate the real underlying economy. Take that stimulus away and we’ll be in a world of hurt unless, of course, the administration decides to do something meaningful to address our failed trade policy. But I don’t see that happening in the foreseeable future.
So, suck it up, Americans! The Great Recession (Great Depression II, sans government stimulus) marches on. The change we believed in hasn’t happened yet and those who had the audacity to hope, it seems, were simply being audacious.