Employment as of September 30, 2010 shows no material growth. The rate of unemployment as reported is 9.6% and we estimate that using past data it should be almost 13%. The drivers of this unemployment we believe are threefold: (i) the general uncertainty in the economic factors resulting from the gross negligence in DC, (ii) the continuing increase in productivity due to the enhancements in technology, (iii) the continued outsourcing due to the high costs of comparable labor here i the US, driven by unions and the like. The above shows the current division of employment as of September 2010. Clearly we still have almost a third of the employment in the public sector, namely the Government, Education and Healthcare. That means we have two people paying for one person not producing wealth. The rate of growth of this burden is significant.
The above shows the monthly changes by gross sector. Manufacturing still lags with growing declines. However the services has shown improvement for the past two months. One cannot outsource services too quickly and technology may have some impact but for the most part it has already been factored in. The Government blip was the census which perhaps the administration tried to use to bump the numbers up but to no avail.
In calculating the true unemployment we look at the total population and at the percent of that population employed at January 2005 and then now. We try to keep the base as the percent of population in January 2005 and then from that we calculate unemployment rates. The source data is above.
The chart above shows the Government unemployment and the unemployment using the 2005 base data. We see the rate is increasing again using the 2005 data due to the loss of the base seeking jobs. We argue that the true rate should be near 13%
Clearly we are no longer tracking the Romer Curve since Romer has gone back to California.
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