Real Unemployment Rate: 11.3%? Nope. 29%!
Real Unemployment Rate: 11.3%
In short: this is merely a favorite BLS gimmick to push the unemployment rate lower for purely political reasons (to the benefit of the administration that makes the content of your emails the most transparent to NSA workers, ever).
The problem is that this transitory fudging gimmick would be sustainable if the US population was no longer rising, however since there is no indication of any taper on the horizon, sooner or later, the historical labor force participation rate will have to be regained. Logically, when that happens, the unemployment rate will have no choice but to soar as the Labor Force soars month after month because sadly even the great welfare state of America has only so much funds it can allocate to an inert population that does no work and merely sits around all day long.
So how does the narrow unemployment rate (U-3, not to be confused with the wider, Underemployment U-6 rate) look if one applies a longer-term average Labor Force Participation rate of 65.8%?
In a word: not pretty. As of May, assuming realistic LFP assumptions, the real U-3 unemployment rate should have been not 7.6% but 11.3%.
If neither the official (U-3) nor the real (U-6) unemployment rate can be trusted, then how can we ascertain a more reliable rate?
A huge step would be to acknowledge the invisible unemployed who are not part of the current BLS calculations. They include not merely the so-called “disabled,” but also those who have left the workforce for other reasons.
CNS News noted of the February 7.7% unemployment rate: “The number of Americans designated as ‘not in the labor force’ in February was 89,304,000, a record high… according to the Department of Labor.” The economic trend-monitoring site InvestmentWatch concluded that the actual American unemployment rate — one that includes all unemployed — is around 30%. The site reasoned that “89 million not in the labor force = 29%, give or take, assuming the US population is 310,000,000 + official unemployment 7.7%.”