The "Real" Unemployment Rate Hits 15.8%

By
Real Estate Broker/Owner

According to the consistently inaccurate Labor Department, the "real" or U-6 unemployment rate hit 15.8% in April.

The reason I say "consistently inaccurate" is because for the past six months the Labor Department has underestimated the number of monthly job losses by an average of over 15% per month, only to at a later date revise the number higher once no one is paying attention.

The real unemployment rate includes three types of workers that are not part of the more publicized U-3 unemployment number:

1.)  Marginally attached workers - people that want a full time job, have looked for one in the past, but are no longer looking for work.

2.)  Discouraged workers - those that have given a job market reason for not looking for a job.

3.)  Persons employed part time for economic reasons - in other words, somebody that wants a full time job but has had to settle for part time work.

As I have written about several times before, the reason why the U-6 unemployment number is relevant is because it gives a better indication of the type of head-wind that the housing market is facing in terms of reaching a bottom, never mind an actual recovery.

Essentially what it means is that there are fewer and fewer buyers that are able to absorb the excess supply of homes.  Additionally, a greater supply of homes will continue to come to the market in the form of foreclosures as a result of rising unemployment.

In short, in the absence of a real housing stimulus plan, the home values are going to continue to deteriorate for the foreseeable future.

 

Comments (32)

Lana Robbins Realtor ® Licensed Real Estate Broker
Aloha Kai Real Estate - Clearwater, FL
Licensed in Florida, Washington, and Hawai'i

I saw the latest numbers too and they do not look good. I'm glad that someone here at AR wrote about this. 

May 11, 2009 02:49 PM
Renee L. Norton
Birmingham, AL

That is scary.  You are right to wonder about the small business owners...I know one who has been very successful and in business almost 25 years, and now on the verge of going under.  Business is almost at a complete halt.

May 11, 2009 02:59 PM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

I think overbuilding in many areas had a lot to do with it, along with a host of other things, but I do think the problems will take much longer to sort out than most people hope for.

May 11, 2009 03:04 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Mark... very good numbers in deed. I was just talking about this with my dad the other day, who I believe has always been very good with business and economics.  It's what he basically studied in college and became a Chemical Engineer with a masters in business economics.  My point being is that I am disgusted with the gov't and the media for controlling what we read, see, and hear.  I have a friend that works for Blue Cross in NJ and they just laid off 170 people in the first wave, with 2 more waves to follow.  Wave 2 - 210 people and Wave 3 - 180 people.  That's over 500 people in 1 quarter, yet we won't see those numbers until the 3rd quarter. We need real time numbers, because real estate is in real time. Hey, business is up for me, but overall, many agents are still hurting. And I say that we don't hit bottom for another 12 months and that this recovery, this so-called recovery, won't start to take place until 2011. That's been my assessment and opinion since the end of 2007 and I have written about. What is your take on this?  Overall, we need to be realistic and prepared... and not just assume things are goo because the media and or certain departments are saying so.  thanks and thanks for shedding some light on this. I would love to get Matt Heaton and Brian Brady into this discussion.... I am going to share this on Twitter and Facebook..

jeff belonger

May 11, 2009 04:04 PM
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

I think your comment about self employed with income down is very true.  Consider those in the real estate industry - agents, inspectors, appraisers, loan officers.  I'm sure the numbers are impressive.

May 11, 2009 05:02 PM
Elizabeth Benefield
Montana Country Real Estate - Libby, MT

What a reality check . I sure hope it does get better some time soon. The market did need to come down . If this didn't happen would it have just kept climbing.

May 11, 2009 05:31 PM
Bettina Settles
Greenwood, IN
Your Indiana Connection

I wished 15.8% would be the true number in several areas of my State. We have 18.9% and talking to other agents in that area we are guessing that it is actually closer to19.2% or even 19.5%.........but yes on the other hand 81.1% are still working.

Bettina

May 11, 2009 10:24 PM
Diego A. Perez
Connecticut Lawn Painting - Wilton, CT

Yes, the numbers are very deceiving. I know people that have taken significantly lower paying jobs just to stay working. this is a very humbling experience for many.

May 11, 2009 11:27 PM
Norma Brandsberg
Marks Realty Co. Inc., Lynchburg, VA, 540-586-9496 - Forest, VA

Remember all is not lost. During the Carter years the unemployment rate went to over 20% and that was the reported rate, not the unreported rate and the market recovered and thrived. This cycle is a normal part of a correction. I am now in my third while selling Real Estate.

 

 

May 12, 2009 12:28 AM
Mark MacKenzie
Phoenix, AZ

Renee:  I think the rest of the country will be there in the next couple of months.

Lane:  I think the people that lose their homes are moving in with family or they are renting.  In either case, there are an awful lot of vacant homes out there.

Terri:  This is certainly true.

Russ:  Those are great depression numbers.  I am really sorry to hear about your community.

Lana:  Thanks :)  I am trying to bring awareness as to how the unemployment numbers are going to impact housing and why we need we a new housing stimulus bill.

Renee:  This has been a humbling experience for a lot of people.

Chris:  Agreed.  We have had several years of overbuilding.  It is going to take several years to absorb these homes.

 

 

May 12, 2009 02:26 AM
Mark MacKenzie
Phoenix, AZ

Jeff:  It has become very clear that the government is intentionally trying to make data look for positive than it is.  What I take from this is that they are more worried than they want to admit.

I agree with you about the bottom being a couple of years out.  There are still too many foreclosures and job losses in the next couple of years.

May 12, 2009 02:31 AM
Mark MacKenzie
Phoenix, AZ

Christine:  This is all the more reason for having a real housing stimulus bill.

Elizabeth:  I agree that the market needed to crrect but what we are likely to see is a significant over-correction that is going to be very painful for the broader economy.

Bettina:  Those are scary numbers.

Diego:  This is what the U-6 number reflects, those that have taken any job so to make some money to put food on the table.

Norma:  The highest post war unemployment rate according to the bureau of labor statistics was 10.8% in Nov and Dec of 1982.  We are not there yet, but we could be on our way.

May 12, 2009 02:38 AM
Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Good post today, Sad but true, it is what it is!!

Thanks,

Patricia Aulson/Portsmouth NH Real Estate

May 12, 2009 02:53 AM
Esko Kiuru
Bethesda, MD

Mark,

That info makes you think hard. Job losses do tend to create a snowball effect and that can affect the real estate market for another while, whether we like it or not.

May 12, 2009 08:59 AM
TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Thanks for the post.  Every agent should be dealing with reality if they want to survive.  This is not negative thinking, but smart thinking.  It may all turn around tomorrow, but banking on that will likely put one out of business.  Those that have rebuilt their business model can actually make some money.

May 12, 2009 09:40 AM
Dustin McAlister
Overland Park, KS

If people quit dwelling on the negative and put more focus on other things we could come out of this faster but media saturation doesn't let up, tv is ridiculous how many negative stories they report these days.

 

 

http://myvarefinance.net/index.html

 

May 12, 2009 01:18 PM
John Evarts
Classic Property Management of Santa Clarita - Santa Clarita, CA

Good post. Another interesting thought is the housing needs of Gen X v. the housing needs of the Boomers. Whatever your political views on the issues, the fact remains that the rise of abortion rates, homosexuality rates, and family planning (i.e. how many kids to have) has resulted in a much smaller set of generations following the boomers. The math isn't complicated that once the Boomers move on to the next life, even with extended life spans, we will have way too much housing in the country. 

May 14, 2009 09:01 AM
Anonymous
Martin

Mark and everyone else, I hope that you people, educated as you are, are aware of the fact that the real unemployment rate does not include people like myself who would love to own a home but cannot due the fact that we can't find jobs. Our government and large corporations continue to ship valuable jobs overseas that we need here at home.

Here's a <a href="http://www.bls.gov/news.release/empsit.t12.htm">link for you people to the government's own website</a> for the U-1 to U-6 figures. They eliminated the U-7 rate years ago, which is closer to the real rate of unemployment. U-3 is reported to make it look better than what it really is.

Hopefully, you people are aware that there will be more foreclosures, more layoffs, more homeless (I am myself currently, even with the AS degree I have), more people and families living in their vehicles or moving in with friends, etc. More commercial loans will default, more automobile loans will be in default and more credit accounts, including credit cards, will be in default as well. This economy is NOT improving, no matter what the government or media would have you people believe. I believe that many of you are aware of this, from what you've written and posted here. Most of the people I know, whether educated or not, renters or homeowners, and even the homeless I've met, realize that we're not starting to do better, and that things will be getting worse yet.

I'm not trying to be pessimistic, I'm actually hopeful for something good to happen in the months ahead for us all. I haven't worked a real job in over 14 months now, and work has been sporadic for me at best. I'm glad it's not worse, but here in the Tampa Bay area, it's the worst I've seen in the last 35 years. Never have I been unemployed this long.

While people can be positive about the present or future, it does nothing to help those who are unemployed or doing without. I'm just glad I have a little bit of savings still, and I won't waste it on a roof over my head while there is no income to keep that roof.

What truly surprises me from the 1970's to now, is that people didn't bother to add solar hot water heaters and that they still don't flock to them. I've had them on homes I owned in the past, and they save the homeowner money in the long run and pay for themselves in anywhere from seven to 15 years. As a previous homeowner, I'd rather pocket the savings. Recently, some utilities increase their electric rates, and that happens frequently enough that anyone that's a homeowner, business owner, etc., would have that solar water heater installed. If they were installed on every roof of every dwelling in the south and west alone, it would decrease the need for new power plants, and put money in the homeowners pockets. Plus, it would reduce carbon emissions in general. No need to spend $50 trillion or more as some are saying will be necessary. That and other things, including improving the fuel efficiency of vehicles by 20 to 50% (which can be done), would reduce emission further, create jobs, increase the tax revenue for the government, etc. Hopefully, more will wake up to that.

I wish you all well, and hope you or someone you know doesn't become unemployed or homeless. I certainly didn't expect it to happen to me, even though I had dreams about it years ago.

May 24, 2009 01:15 PM
#31
Anonymous
Martin

Sorry the the html didn't work here for the link to the government's website, perhaps this is better:

http://www.bls.gov/news.release/empsit.t12.htm

May 24, 2009 01:18 PM
#32
Mark MacKenzie
Phoenix, AZ

Martin,

Thanks for the post, I am really sorry to hear about what you are going through, you certainly are not alone.

I am very aware that this "recession" has a long ways to go.

May 24, 2009 02:40 PM