"The welfare of humanity is always the alibi of tyrants" - Albert Camus

Saturday, March 5, 2011

So, What Is The Real Unemployment Rate?

It seems that the U3 unemployment rate has finally cracked the 9% rate for the first time in well over 2 years, or has it?

The official unemployment rate for February was reported by BLS to be 8.9% on Friday Morning.  From the reaction of the liberal media and the Administration, you would have thought that we just attained full employment.

I hate to rain on their parade, but wait just a minute!

According to Gallup, which surveyed 19,000 people with a margin of error <0.7%, the U3 unemployment rate for February stands at 10.3%, with the all encompassing U6 standing at 19.9%!

The difference?  Gallup does not seasonally adjust its rate (using a straight forward sampling of persons who are or would like to be in the labor force) whereas the BLS uses a black box and 'birth death' adjustments that no one, probably including people currently at the BLS, knows the workings of.  Here is a recent post with relevant data for those interested in delving further in to the matter.  Good luck, and if you do find out the workings of the black box, I am sure Dr. Steven Hawking has a theoretical physics mystery or two for you to solve.

Contrary to common misconception, the BLS data also consists of a survey (in other words, is no more reliable than Gallup methodology) and the mysterious adjustments it uses are suspect to say the least, especially when seasonal norms they rely on are not as consistent during turbulent economic times and can yield false rosy picture of unemployment. 

Take it for what it is worth.  Common sense should tell you that job creation picture will remain shaky as long as an anti-business, pro-union crusader who is hell bent on attaining 'redistributive justice' at any cost occupies the White House.


P.S.  By the way, what is it with deviousness of bureaucrats creating models no one can figure out?  See the parallels between the 'black box' BLS uses and the intricate models that NASA and IPCC use to predict man caused global warming (which they have admitted are faulty)?

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