Archives For Economic Indicators

While perusing the WSJ this morning, I came across an article that stated that the unemployment rate is now down to 5.1%. Unfortunately, the labor participation rate now sits at 62.4%. When President Obama took office, that number was 65.7%. If we adjust today’s numbers using a 65.7% labor participation rate, we get an unemployment rate of 9.9%.

How so?

Let me illustrate with some numbers;

Unemployment Adjusted for LPR

To arrive at these numbers I simply took the difference in the labor participation rate and added them to the unemployed. At 9.9%, that’s nearly twice the 5.1% reported unemployment rate.

To be fair, the labor participation rate does fluctuate. Here is the history of the rate since 1948 (from the BLS):

Labor Force Participation Rate History

It peaked in the 90s, but has fallen off the cliff in recent years.

Labor Participation Rate Since Obama Took Office

Some of the drop could be due to people retiring, but certainly not all.

Did you hear the news?

Non-farm payrolls increased 288,000 in April and the unemployment rate “plummeted” .4% to 6.3%. See this Yahoo! story.

At the same time the employment participation rate fell .4% to 62.8%.

In case you don’t know, the participation rate “refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate.” (Source).

Here is what that rate has looked like since 1990:

Labor Participation Rate History (1990 - April 2014)

It’s dropped 2.9 percentage points since President Obama took office. It had dropped 1.5 percentage points during Bush’s presidency.

I understand some of the reason for this drop could be people retiring. Regardless, it makes the unemployment rate statistic almost meaningless.

While writing this post, I happened to see an AFL-CIO blog post about this news. They failed to even mention the labor participation rate. Why does this not surprise me?

Have a good weekend, everybody.

Oh goody!

MSN lists 12 things that will cost more in 2013. Some of them aren’t a big deal. Food, however, is a big deal. Their list:

• Cars

• Food

• Grain

• Health insurance premiums

• High-end TVs and home theater systems

• Computers

• Copper

• Smartphones

• Daily deals

• College tuition

• IPhone 5 accessories

• Shipping

This is interesting. You can click on the graphic to go to the source. Bottom line: Unemployment is MUCH HIGHER than we’re being told it is.

The Real Unemployment Rate

Click on graphic to go to source

Question: why are Democrats so confident?

I don’t know about you guys but I think it’s misleading the way the unemployment rate is calculated.

Today’s employment report shows that 96,000 jobs were added in August. I did a quick search and found that we need to add about 250,000 jobs per month in order to drop the unemployment rate. We added 96,000 jobs but 400,000 people are no longer counted in the numbers because they gave up looking for work.

So, what’s the real unemployment rate?

According to the last paragraph of this article, it’s around 14.7%, or nearly TWICE the official number.

Here are the monthly CPI changes I have going back to 1926. I’m not exactly sure where I got these numbers. I think it was the website but I’m not sure. It’s been a couple of years since I first collected these numbers and then I updated them with the CPI data from BLS.

Here they are. Just click on the graphic to download the PDF. Enjoy!

Monthly Inflation (CPI) Changes 1926 to Present