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.