January 9, 2009
-- by Dave Johnson
Today the official unemployment rate jumped to 7.2%. But the real story is likely worse than this number. There are other ways to measure unemployment, including looking at the number of people who are working part-time but want to be working full-time. There are 8 million of these. The official number is about people who are "looking" for work but there are also the "discouraged" workers, people who have largely given up looking. they are not included. And to top it off the official unemployment rate has been changed over the years, always in ways that make this 7.2% number lower than the official number would be if measured in ways it was measured decades ago.
Another number that can be used is "U-6" which measures total unemployed. The official description is:
Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.U-6 is currently 13.5%
Posted by Dave Johnson at January 9, 2009 12:23 PM
On the News Hours with Jim L., David Brooks pointed out that we have never tried to spend our way out of a recession in the last 50 years. The entire plan is a hail Mary pass. A tech bubble, housing bubble, oil bubble, NOW US Spending Chinese buy Treasuries bubble. Consider if the Chinese become rationale. They shift their purchases to gold, as they will. (The Chinese symbol for gold means money)
Suddenly, our treasuries must be auctioned at 8,9 maybe 17%. Imagine the housing market with 15% mortgage, imagine the small business loan. Obama's trusted advisor Volcker raised the Fed rate to 15% in 1979 to save the dollar and slam inflation. That was a foundation stone for the the Reagan,Clinton Bush expansion where US wealth went from $25 Trillion to $56 Trillion. The BHO plan is a BIG COMPLEX SLOW contraption. Folks need to 1. eliminate all consumer debt 2. Only fixed rate mortgage 3. Put 6 months spending in CDs, 6 months in AU bullion. Grandmas economic plan from the '1930s is now the sophisticated plan.
I agree with almost everything you write. I think that the government has been borrowing massively since Reagan, and we've all been calling it prosperity, and the bill is coming due now.
But a difference is that with much of Obama's plan it is INVESTMENT. All of the infrastructure work is investment. (Lots of it is just to repair maintenance that has been deferred, and we called the cash we should have been spending prosperity.) All of the "green" work is investment -- because it lowers all of our costs in the future. (If we retrofit government buildings to be green that saves billions a year from now on on heating and cooling bills plus the resulting lower demand for oil lowers the price of oil for everything else.)
AND it creates millions of jobs, which keeps local stores, etc in business and keeps demand up in the economy - above where it would otherwise be.
I don't agree with the tax cuts. I don't see how that helps anything except causes more government borrowing. This year's earlier "stimulus package" of tax cuts did NOTHING.
And remember that when Clinton raised taxes on the rich, that brought us a decade of a very very good economy.
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