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Jobless rate now at 16.5%—using Depression-era yardstick

(Reuters)—When economists claims the current U.S. slump could never turn into another Great Depression, most point to one thing: one of four Americans was out of work in the 1930s.

But since the definition of joblessness has changed over the years, this expert assessment might be too rosy.

As many as 25% of Americans were unemployed during the days of bread lines that symbolized the Depression. That figure is more than three times the current 6.7% unemployment rate, the economists say. Even the most pessimistic estimates only foresee the rate rising barely above 10%.

“We are in a very, very different place than the U.S. economy was in the 1930s,” James Poterba, president of the National Bureau of Economic Research told a recent Reuters Summit.

Or are we? Figures collected for Reuters by John Williams, from the electronic newsletter, suggest that, while we are not there yet, the comparison is not as outlandish as it might initially seem.

By his count, if unemployment were still tallied the way it was in the 1930s, today’s jobless rate would be closer to 16.5%—more than double the stated rate.

“I expect that unemployment in the current downturn, which will be particularly deep and protracted, eventually will rival, if not top, the 25% seen in the Great Depression,” Mr. Williams said.

He and other critics have one particular sticking point with the current way of measuring unemployment: the treatment of discouraged workers.

Under President Lyndon Johnson, the government decided individuals who had stopped looking for work for more than a year were no longer part of the labor force. This dramatically decreased the jobless rate reported by the government.

“Both part-time workers wanting full-time work and discouraged workers tend to make the unemployment rate lower than it would otherwise be,” says Robert Schenk, professor of economics at St. Joseph’s College, Indiana.

The December report, released on Friday, showed another month of more than half a million job losses —and a jump in the unemployment rate to 7%.

However, some economists, including Kenneth Rogoff at Harvard University, now say joblessness could top 11%. Under Mr. Williams’ methodology, that picture might look much more like the Great Depression.

Jobless Rate Hits 7.2%, a 16-Year High

In the news today it almost seems as if Obama is already President, as he already wrangles with the Congress about just how to pull the rabbit out of the hat suggests that B’rer isn’t nearly out of the patch just yet.  Nope.  It’s how are we gonna spend these zillions of new minted phonybucks and just who is gonna get and who not.  Wouldn’t you know?

So while the cyclone spins the economy down its deserving toilet  –  well, it was all just a sham  –  now we haggle over just how to disperse the next chunk of fakery.  Scarcely a word is to be found about that awful matter of reality.  That is just too politically a hot potato to touch, so forestalled again goes that one.  Which, of course, will only make matters worse when the real reckoning comes.    Of such folly is politics made.

Poor Barack, who while doing his best to deflate the optimism bubble attached to his imminent Presidency, is already floating so far above any possible realistic resolution, that he and the USA are surely headed for a swift hard crash when the inescapable arrives.   Sorry folks, but it is all much worse than anyone in DC or on Wall Street, or down on Main Street, dares to say.  You were sold a bill of goods, but, alas, it wasn’t.

Bridge, anyone?

[For a long but interesting bit of reading, see this NYTimes forum, in which an awful lot of people vent on the present economic squeeze.  There’s a wide range of feelings, and a lot of antagonism, as one would expect under the pressures being generated.  While readers of the NYTimes hardly constitute a fair sampling of US population, I suspect if we could get those elsewhere on whatever scale to articulate, you’d get even more anger.  Hot times coming?]

New jobs numbers portray an economy in near free fall

Employers rid themselves of 423,000 jobs in October, not the originally reported 320,000, and 584,000 positions in November, not the 533,000 first reported by the BLS.

Notice a little political juggling of the figures here – October pre-election figures only off by 25% or so..


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