Again, worst recession since the Great Depression? Not! —At least not yet.
So the press is kicking and screaming, and scaring everyone by saying "worst since the Great Depression," yet look where we are today. I count four recessions with higher unemployment rates than the current one.
The press has to make its "worst since the Great Depression" claims based on economic forecasts, but economic forecasting is notoriously unreliable. Furthermore, actual economic forecasts expect the unemployment rate to reach 9%, which is still lower than the early 1980s recession. So, their "worst since the Great Depression" claims are not based on current data, nor on actual economic forecasts, but rather on fear mongering.
Now, based on current valuations, I expect housing prices to continue falling for several more years. Since housing is the cause of our current recession, this may well turn out to be the longest recession since the Great Depression. And, yes, unemployment rates could exceed those of the early 1980s. However, the U.S. government is enacting an $800 billion stimulus package plus a bank bailout, in an attempt to weaken the link between falling housing prices and rising unemployment.
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These unemployment posts are bit misguided. You should know better. You cannot compare today's unemployment numbers to those in 1960 or the 1930's as you are comparing apples and oranges. Redraw this chart using the U-6 unemployment number and you have a much better comparison (that number is in the double digits). This IS the worst recession since the great depression, although, net yet as bad as the great depression.
ReplyDeleteYeah, since the 90’s the unemployment number reported counts only U3, those out of work looking for work. It does not take into account those working part-time but would want to work full time or those that are not working but have stopped looking because they have lost hope. Taking all those number together you get U6, which is close to 13.5-14% last I read.
ReplyDeleteOne might argue that U6 isn’t accurate, and that’s fine. My point is that you can’t compare today’s rate with that of yesteryear without looking through the proper lens.
Different Anonymous here -- Agreed. I'm neither an economist nor a policy wonk, but I think the way the government measures or defines unemployment has been revised repeatedly over the years -- and the revisions always reduce the apparent number of unemployed people. For example, the way military personnel are categorized has changed. In other words, beware of lies, damned lies, and statistics.
ReplyDeleteBe sure to read the second to last paragraph. Living in NOVA sucks, but it is about to get a whole lot suckier.
ReplyDeleteRICHMOND, Va. - Gridlock on Virginia highways isn't going anywhere -- so how do you unlock the gridlock when the transportation funding forecast is described as "bare bones?"
"We have to see a lot more in the way of bus and rail," says Virginia Transportation Secretary Pierce Homer. "But in order to make it all work, we also have to fix the land uses."
The "land uses" are smarter development decisions tied into transportation projects. It's a policy that Gov. Tim Kaine has been peddling since he took office.
"Those are starting to take hold," Homer says.
He points to plans to redevelop Tysons Corner as part of the Dulles Rail Expansion as an example.
"Things like the Tysons Task Force are absolutely a necessary component to solving our long-term transportation problems."
Virginia has seen a greater focus on funding transit in the last decade. Transit and rail have grown from about 5 percent of the six-year transportation plan eight or nine years ago to nearly 30 percent today, according to state transportation leaders.
"That's a very significant change," says Homer.
However, Virginia's long term funding picture isn't pretty, the state just reduced its six-year transportation plan by about $2 billion -- 20 percent of those cuts are being felt in northern Virginia.
"The long term forecast for transportation funding is very dismal. But this combination of greater transit investment and better land use is one way to improve the transportation situation long term."
link:
ReplyDeletehttp://wtop.com/?nid=30&sid=1602893
Anonymous 8:33 AM said...
ReplyDeleteYou cannot compare today's unemployment numbers to those in 1960 or the 1930's as you are comparing apples and oranges. Redraw this chart using the U-6 unemployment number and you have a much better comparison (that number is in the double digits).
Anonymous 9:01 AM said...
Yeah, since the 90’s the unemployment number reported counts only U3, those out of work looking for work. It does not take into account those working part-time but would want to work full time or those that are not working but have stopped looking because they have lost hope. Taking all those number together you get U6, which is close to 13.5-14% last I read.
One might argue that U6 isn’t accurate, and that’s fine. My point is that you can’t compare today’s rate with that of yesteryear without looking through the proper lens.
Sorry, both of you are wrong.
First, the graph doesn't go back to the 1930s, so that's completely irrelevant. As I clearly stated twice in my post, the graph starts in 1948.
Second, I am not the one comparing apples and oranges. You are. U-6 is a different measure of unemployment than the official unemployment rate (U-3). U-6 was introduced in 1994 to be a broader measure of unemployment than the official rate, but the official rate has not substantially changed.
U-6 includes discouraged workers and underemployed part-time workers. THE OFFICIAL UNEMPLOYMENT RATE NEVER HAS INCLUDED THEM. By demanding that I compare the official rate prior to 1994 with U-6 after 1994, your basic argument is that apples have changed over time, so I should compare apples prior to 1994 with oranges after 1994. That's complete B.S.
Here's what the BLS has to say: "The concepts and definitions underlying the labor force data have been modified, but not substantially altered, even though they have been under almost continuous review by interagency governmental groups, congressional committees, and private groups since the inception of the Current Population Survey."
Here's what another source has to say: "Often, critics suggest that the official unemployment rate understates true unemployment. In fact, since the official rate was first computed in 1940, only minor changes have been made to the definition of unemployment despite numerous outside reviews. The official measure has withstood the test of time largely because of its objectivity."
Anonymous 1:05 PM said...
Agreed. I'm neither an economist nor a policy wonk, but I think the way the government measures or defines unemployment has been revised repeatedly over the years -- and the revisions always reduce the apparent number of unemployed people. For example, the way military personnel are categorized has changed. In other words, beware of lies, damned lies, and statistics.
Can you provide a source for your claim that the way military personnel are categorized has changed? The closest I have found is the following:
In 1983 the Labor Department experimented with a second unemployment rate that counted as employed members of armed forces stationed in the U.S. The traditional rate excludes them from the labor force. The reason for considering this alternative series was that "with the change to a volunteer system, military employment is not substantially different from civilian employment." If those in the armed forces were counted as employed, unemployment rates would fall by several tenths of a percent. Source.
Notice it says "the Labor Department experimented with a second unemployment rate." It doesn't say the Labor Department changed the existing unemployment rate. Furthermore, the word "experimented" suggests they didn't stick with it. This source confirms that they are still not counted.
Some sources for your reading pleasure:
BLS Labor Force Statistics FAQ
BLS: How the Government Measures Unemployment
Weaknesses of Unemployment Statistics
Shadow Stats: Employment and Unemployment
Alternative Measures of the Unemployment Rate
This is Anon 9:01.
ReplyDeleteSo my post was based on a post from The Big Picture some time ago. But after re-reading that post and the comments as well as a link Barry provided:
BLS introduces new range of alternative unemployment measures
John E. Bregger , Steven E. Haugen
BLS, October 1995
http://www.bls.gov/opub/mlr/1995/10/art3full.pdf
I'll agree with James. Changes have been made, but the numbers are comparable.
Unemployment just hit 9.7% and rising.
ReplyDeleteGallup states that the real unemployment rate is 10.3% and that the underemployment rate is nearly 20% (19.9). Those are real numbers folks. I know. I am one of them. I've been unemployed for over two years. So, QUIT DEFENDING OBAMA. HE NEEDS TO BE IMPEACHED. HIS LIES ABOUT THE SUMMER OF RECOVERY ARE DESPICABLE!!!
ReplyDelete