The "Real" Unemployment Rate Rises To 16.5%

By
Real Estate Broker/Owner

The Bureau of Labor Statistics announced today that the U-6 unemployment rate rose to 16.5% as a result of 467,000 jobs being lost in June.  The number of June job losses breaks a trend of four consecutive months of job loss declines.  The advertised unemployment rate rose to 9.5%.

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.

The June job losses and rising unemployment rate are the latest sign that not only is an economic recovery further off than most economists are predicting (yes, I know unemployment is a trailing indicator but you can't have 467,000 people losing their job every month and expect to have a strong economy) but that the Obama administration has woefully underestimated the gravity of the situation.

The map to the left illustrates that with Obama's stimulus plan, the administration predicted a peak unemployment rate of 8%.  We are now at 9.5%.

The significance of this unemployment "defecit" between the projected and the actual rate is that the government continues to be behind the curve with their efforts to combat a deteriorating economy and a housing depression.  But apparently according to Warren Buffet, Obama has moved onto things more important than the economy.

Comments (6)

John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark - Many of us have been watching all the numbers and we knew the talk of recovery was premature. Even some at the Fed are concerned about the talk of "green shoots."  Just a couple of days ago Janet Yellen, President of the Federal Reserve Bank of San Francisco said, "I expect the pace of the recovery to be frustratingly slow...In past deep recessions, the Fed was able to step on the accelerator by cutting the federal funds rate sharply, causing the economy to shoot ahead. This time, we already have our foot planted firmly on the floor. We can't take the federal funds rate any lower than zero."  I think she summed it up.

Jul 02, 2009 01:59 AM
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Smart post. I was just watching on the news how the publicized numbers are wayyy shy . . . since they do not take into account the people who didn't apply for UI or whose benefits have run out! The greatest problem of all . . . where are these people going? Hopefully to under the table jobs so they can survive!

This is a huge problem and I don't see our administration making headway to correct it with current plans  . . .

Small businesses need to be empowered! Not frightened to death . . . as they are.

What I also think is interesting is that the county with the highest number of non counted unemployed is my former home county, Riverside Co CA -- Mary Bono whatever-her-last-name-is-now country. DO NOT GET ME STARTED . . . hahaha

 

Jul 02, 2009 02:04 AM
Mark MacKenzie
Phoenix, AZ

John:  What is amazing to me is that the government actually thinks that monetary policy is going to fix the same crisis that monetary policy caused.  We need new fiscal policy, aggressive tax cuts and incentives.

Candice:  "This is a huge problem and I don't see our administration making headway to correct it with current plans."  Neither do I.  They are moving on to other agendas while the economy and housng market wilt.

 

Jul 02, 2009 02:26 AM
Mike Saunders
Lanier Partners - Athens, GA

Mark - it's not about fixing the economy, it is about remaking it, even if people are hurt in the process. There are still many out there who are thinking that it is going to get much worse before better.

Jul 02, 2009 02:36 AM
Terry Haugen STAGE it RIGHT! 321-956-2495
Stage it Right! - Melbourne, FL

Mark, it appears to me that a total revamping of our economic system is probably in order, however, I would assume, it can't be done by just stopping the old system while we work on the new.  All the measures currently implemented are an attempt to stop the bleeding long enough to work on the long term problems.  Its only been 5 months, Rome wasn't built in a day, and it took the previous president longer than that to tank our economy.

Jul 02, 2009 03:47 AM
Hugh Krone
Weichert Referral Associates - Hamburg, NJ
Realtor, Sussex County NJ

Terry , The economy started to tank once the Dems took over congress President Obama has just accelerated it. Remember by his own words he has been working on the recovery plan since november and everything so far has been disastrous.Just how far in the tank do we have to go before you admit there is even the slightest possibility we are headed in the wron dirction. Regardless of how much you hate Bush it is Obama's economy once the stimulus was passed. I wonder if you wil someday be saying"He's only been in power 31/2 years give him a chance.

Jul 02, 2009 10:41 AM