More on the Economy

October 5, 2009

On Friday I wrote about the bleak unemployment numbers released by the Bureau of Labor Statistics. Over the weekend, I heard some talking heads presenting a more optimistic economic picture (e.g., Juan Williams on Fox News Sunday). The preponderance of true expert opinion I heard over the weekend via internet streaming was much more gloomy than I bargained for. Because you probably wont have an opportunity to hear a detailed analysis of the numbers, I decided to provide links to audio streams that will do so.

The Korelin Economics Report is a weekly radio and internet webcast with a libertarian perspective with a distinct focus on precious metals. That said, Al Korelin, the host, interviewed former Labor Dept chief economist under George W. Bush, Diana Fuchgott-Roth for this past weekends program. Furchgott-Roth is a Stanford-trained labor economist who is a wholly mainstream conservative now working for the Hudson Institute in Washington. John Walter Williams is an economist and labor statistics guru. I recommend listening to them in this order: Furchgott-Roth, Williams segment 1, Williams segment 2 (you can stop around half-way through Williams / segment 2 when Korelin and Williams discuss whether gold is a good investment).

A main point both analysts make is that the most comprehensive unemployment number (U-6) now has a seasonally adjusted rate of 17.0%. Here is the definition of U-6 taken from Table A-12 of the BLS Household Data:

U-6 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.

17.0% comes to about 1 in 6 as a truer measure of unemployment or underemployment. As Furchgott-Roth notes, it is most unfortunate that policy makers in Washington are not focused on doing those things that will create jobs, so the potential for a rapid improvement in economic activity and employment is not great.

In the final segment, Williams discusses the fact that the new report indicates BLS has greatly underestimated the decline in payroll numbers by 824,000. (BLS News Release, USDL-09-1180, p. 5.) This prompted Williams to conclude that in May (approx.) with this revision included the U.S. reached the steepest decline in payroll employment since the Great Depression.