January 9th, 2009:

via UNEMPLOYMENT REPORT: Rate Jumps To 7.2%, 524,000 Jobs Axed

JEANNINE AVERSA | January 9, 2009 08:58 AM EST |

WASHINGTON — The nation’s unemployment rate bolted to 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs. The labor market is expected to remain weak as mass layoffs continue.

The Labor Department’s report, released Friday, underscored the terrible toll the deepening recession is having on workers and companies, and highlights the hard task President-elect Barack Obama faces in resuscitating the flat-lined economy.

Out of Work

7.2%! Wow!

If the truth be known, the real unemployment rate would be somewhere around 10-12% which is in line with most other industrialized nations.

The Bureau of Labor Statistics, the branch of the U.S. Department of Labor that crunches labor number for us,  screws with the numbers and have been for decades. First of all, they don’t get these figures from actual unemployment files. They do what is called a Current Population Survey.

That’s right, it is just what it sounds like – a household survey. The  Bureau of Census conducts the monthly survey for the BLS and the section of population surveyed, the questions asked, and the manner in which the questions are asked all play a part in the unemployment rate and the direction that BLS management wants it to go is to be as low as possible.

For example, they used to ask “Is there anyone in your household unemployed?” Now they ask, “Is anyone in your household unemployed and actively looking for work?” You get two very different figures between those two questions. The Bureau of Labor Statistics has been directed to estimate but exclude from reports certain discouraged workers. These are described as persons not in the labor force who want and are available for a job and who have looked for work sometime in the past 12 months but believe there are no jobs available or there are none for which they would qualify.

The Census Bureau also leaves out those who are partially unemployed. These folks range from those who have been laid off and have found low skilled part time work, seasonal workers, and those workers out there on the margins like migrant farm labor.

There has been much debate through the years about the difference between the  advertised unemployment rate and the so called adjusted rate. To their credit, the Bureau of Labor Statistics does a good job collecting data on the whole picture but you have to dig for it. But they get low scores for total transparency.

Obama says a bold approach is needed to bust through this cycle and revive economy.

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” he said Thursday.

“If nothing is done, this recession could linger,” Obama warned. “The unemployment rate could reach double digits.”

Obama, who takes over Jan. 20, is promoting a massive package of tax cuts and government spending that could total $775 billion over two years. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.

Even with a new government stimulus and the Federal Reserve’s decision to ratchet down a key interest rate to an all-time low, the unemployment rate is expected to keep rising. Some economists think it could hit 9 or 10 percent at the end of this year.

Lastly, I just want to send out a big FU to Bush & Co. for the fine job on keeping our economy vibrant.