The "Real" Unemployment Rate Jumps To 16.4%

By
Real Estate Broker/Owner

According to the Bureau of Labor Statistics, the "real" unemployment rate, the U-6 rate, jumped from 15.8% in April to 16.4% in May as the labor market shed another "projected" 345,000 jobs during the month.  The U-6 rate has jumped nearly 7 basis points from May of 2008 when it was 9.8%.

As I have written about before, the U-6 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.

There are two problems with the labor market right now that are not independent to the housing market.  Not only are jobs being lost, but jobs are not being created as is evidence by the rising unemployment percentage.

This rising unemployment rate means that more homeowners are at risk of losing their home and fewer buyers will be able to obtain a loan to buy their first home.  The results are already being played out in the housing market as 12.07% of all mortgages are at least 30 days late, the highest on record.  Additionally, existing home sales, despite massive government intervention, remain stunted.

At the current pace of affairs, and with unemployment not expected to peak until 2010, the housing market, contrary to Jim Cramer, is not at a bottom.

 

 

Comments (4)

Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Mark - I have an idea!  Maybe all the banks and lenders out there still lending (it's become fewer and fewer all the time) can hire more people to take care of all the refis and purchases they're doing and it wouldn't take 45+ days to get a loan closed.  JMHO  :)

Jun 06, 2009 02:34 AM
Kevin Robinson
Twin Falls, ID
Fractional Developer

Mark- My research tells me that another huge amount of foreclosures is on the way. I buy short sales and have found that over the last few months the banks are actually faster in getting back to me and my agent, yet much harder to negotiate with. They are wanting more and more concessions from me as a buyer, but not moving on the price. No problem in that they have the right to do this, but when I buy at a higher price, it takes me longer to resell to an end buyer. My problem in the short run, but everyones problem in the medium and long run as more homes are on the market, lowering prices and increasing DOM again.

Another big problem that I am seeing is the high end buyers (600K and up) do in fact have the cash to buy, but are holding onto it. Once again, their money and their right to hold onto it, but it is really slowing the luxury home market to a standstill. In some areas I am seeing entire neighborhoods of high end homes on the market.

 

Jun 06, 2009 02:35 AM
Jon Budish
Resident Realty - Fort Collins, CO

One catagory of unemployed you don't mention, and may be impossible to find accurate numbers for. How many undocumented workers who are paid "under the table" are out of work now?

Jun 06, 2009 05:34 AM
George & Arlene Paukert
Road to Wealth, Inc. - West Palm Beach, FL

I keep hearing on the six o'clock news that it is getting better, well, I don't know what they are looking at or who they are talking to, but it certainly not those people who are unemployed.

Jun 06, 2009 11:54 PM