Saturday, January 9, 2010

More Thoughts on Unemployment

We went back and asked a few more questions on the current unemployment numbers. Namely are there some inconsistencies which may be making it lower than we think it should be. I do not mean not counting those who have given up, I just mean the workforce.

Let us begin with the chart below.

This shows the total population and those employed. One must remember that the total employed plus the unemployed is the total employment base. As we shall show shortly that should remain a fixed percent of the total population, at least in the short run of this analysis.

Now consider the next chart.

This shows some of these ratios. Thus we see there may be a problem. We then asked what would the unemployment rate be if:

1. The total base was the same percent of the population

2. Those unemployed were the numbers we can count

3. We then calculate unemployment percent according to these numbers.

We show this below:

Thus we see that the adjusted unemployment reflecting the constant percent of total population becomes 11.5% and not 10%. We argue that there is something in error with the adjusted numbers from the BLS. Things are worse and getting even more so.