Lies, Damned Lies And Unemployment Numbers

Why things are different than the “conventional wisdom” that is being spewed by some in the media: The game changed.

Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.

About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

The number of people who are considered to be in the labor pool is only 64.6% of the population. As low as it was in 1985. 1.7 million Americans simply gave up looking for work in the six month period from July to December, 2009. Those people were magically removed from the unemployment data.

But they still exist, they are still without work and they really have diminishing hopes. The longer they are out of work, the harder it will be for them to find work.

UPS is cutting another 1,800 jobs while planning for improved economic activity in 2010. In other words, they are getting smaller and plan on staying that way even if business picks up. That is the new reality. There will be fewer jobs in the future. If companies are doing this, they will plan on covering spikes with temporary workers and keep the regular employees fewer in number.

The game has changed, folks. It is going to take a long time to replace the jobs lost just in 2009.