Saturday, March 5, 2011

Don't Worry, Be Happy

This is a bit wonkish, so hang with me.  The first graph is the US unemployment rate according to polling conducted by the federal government.  The second graph is the unemployment rate according to a Gallup poll.  The two organizations use different sampling techniques, so the results are never exactly the same.  However, the differences are usually small and the trends (moving up or down) are usually the same.

For the past several months the differences have been growing and the trends in opposite directions.  The government would have you believe that unemployment is declining and is now at 8.9%.  Gallup would have you believe that unemployment is rising and is now at 10.3, as high as it was a year ago.

Who's right?  Neither.   In the 1970's the government stopped counting so-called 'discouraged workers' -- those who couldn't find a job and have stopped looking -- and neither of the unemployment numbers above include the discouraged workers.

When we add in the discouraged workers and those people working part-time who would rather be working full-time, we get a better sense of the magnitude of our economic crisis.  The feds put that combined number (U6, as the Bureau of Labor Statistics calls it) at 15.5%, while Gallup puts that number at 19.9%

When 1 in 5 people are unemployed or underemployed, that's pretty much the definition of a depression, isn't it?

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