No jobs, no recovery

No jobs, no recovery

"There are three kinds of lies: lies, damned lies and statistics."

No one really knows who first uttered this timeless observation, but politicians have long realised how useful statistics can be when trying to convince the population that all is well in the economy.

Nowhere is this more true than in the reporting of unemployment.

The latest jobless numbers from the US are grim enough on the surface, but the depressing aspect is that there's a lot more bad news underneath. 

First, here's a bit of perspective on how the current jobless situation measures up in historical terms. (source here. More grim graphs here.)

But what the headlines don't mention is that the underemployment rate is now 17.5%; the highest on record. Just 58.5% of adults are working, the lowest since 1983; and the weekly hours worked measure is at record lows. (meaning even those in work are being forced to work fewer hours, as employers try to reduce the wage bill.) 

What is underemployment? Well, it's the number that the Bureau of Labor Statistics would rather not highlight.

There are 6 official measures of US unemployment, and the headline number released by the government is always the most politically palatable. It's the one that tries to remove as many people from the count as possible by applying a very strict definition of what exactly "unemployment" means.

For most economists, though, the bottom line number - known as U6 - is the most telling. This measures the "total unemployed", no statistical fudging or spurious dilineations. (Official definition here.)  

U6 is about as ugly as it's been in post war history.

There's much, much more statistical fudging going on (e.g. the competing "household" and "establishment" surveys), but the bottom line is this: there's not really much point in talking about recovery and GDP numbers when there are millions of people out there wanting, but not able, to work.