The Job Market Is Worse Than You Think
The reported unemployment rate spiked to its highest level in more than 15 years. But some think the ‘true’ rate is really much higher.
The unemployment rate rose to 7.2% in December, the highest it has been since 1993. There’s a growing number of market experts who think that the government’s employment statistics don’t accurately paint the true picture of the job market.
Talkback: Are the government’s job statistics accurate?
But one prominent critic, John Williams, an economist and publisher of the research site Shadowstats.com, said that when you take into account the large number of people who have been so discouraged by job market woes that they have not been actively looking for work for more than a year, the unemployment rate is actually as high as 17.5%
Williams explains that prior to 1994, all people who were “discouraged workers” were counted in the unemployment survey. There is value to the unemployment number, even though it has its foibles,” said Barry Ritholtz, CEO and director of equity research at research firm Fusion IQ and author of the soon-to-be-published book “Bailout Nation.”
It goes without saying that even if you are willing to accept the 7.2% number as an accurate level of joblessness, the unemployment rate has shot up at an alarming rate in the past few months. Should anyone really be surprised by the job numbers?” Ritholtz said.
He predicts that the headline unemployment rate could go as high as 10% before the recession is over and that the “underemployment” figure could reach 16%
And there was more bad news in the December jobs report as well that didn’t get as much attention as the 7.2% unemployment rate, 524,000 job losses for the month, or nearly 2.6 million jobs lost for the year.
Keep in mind that these are all lagging numbers. What’s most important is trying to figure out what’s next for the job market.
Brian Battle, vice president of Performance Trust Capital Partners, a fixed-income investment advisory firm in Chicago, said that spooked him more than other numbers.
“That portends more job cuts in the future. So with all this in mind, can President-elect Barack Obama’s proposed stimulus package actually help to create jobs? Obama has promised to save or create 3 million jobs over the next two years.
Williams said the plan to create new jobs through increased spending on infrastructure could work…but at a cost.
source : cnn.com