The following information is excerpted from Jerome Corsi’s Red Alert, an online newsletter that he publishes.
According to Corsi, the true rate of unemployment for October 2009 may be 22.1 percent, not the 10.2 percent reported by the Bureau of Labor Statistics.
Unemployment at 22.1 percent, if accurate, would be at numbers not seen since peak unemployment was reached during the 1973 to 1975 recession.
Economist John Williams, publisher of ShadowStats.com, estimates that the peak of unemployment in nonfarm unemployment in the Great Depression of the 1930s would, by his methodology, have registered at 34 to 35 percent in 1933. So, how does the current administration get away with reporting the lower unemployment percentage?
Corsi explains that the Clinton administration changed the way BLS calculates unemployment statistics by excluding “discouraged workers,” those who have given up looking for a job because there are no jobs to be found.” Since the Clinton years, discouraged workers looking for a job for more than one year have not been counted as “unemployed” because they are considered to have dropped out of the labor force.
The BLS still includes in “U6 Unemployment” calculations short-term discouraged workers, as long as they have been looking for a job less than one year.
This definition permits the administration to under-report “U3 unemployment” at 10.2 percent when real unemployment as calculated before the Clinton administration redefinition is twice that amount, Corsi states, and U6 unemployment lies somewhere in between.
These differences are illustrated in the following chart that Williams produced in the “Alternative Data” section of his website named “Shadow Government Statistics: Analysis Behind and Beyond Government Economic Reporting.”
“The convenience is that by reporting unemployment at 10.2 percent instead of at 22.1 percent, the administration can clearly continue advancing the argument the U.S. economy is in recovery and the recession is over, even if the truth contradicts those claims,” Corsi wrote.
Williams concludes that the economy is not recovering, but has been stimulated by excess liquidity placed into the financial system by the Federal Reserve keeping federal-funds rates at the historically low rate of zero, or near zero.
“Understanding that the real level of unemployment in October 2009 was closer to 22 percent than to the officially reported 10 percent is an important corrective,” Corsi wrote, “especially if we are to appreciate the extent to which a Dow at or above the 10,000 benchmark is nothing more than another Fed-created bubble.”
“Truly, the only way the Fed can stimulate the economy is through creating bubbles generated by keeping interest rates artificially low and the Bernanke stock-market bubble caused by keeping interest rates at zero is merely a repeat of the Greenspan housing bubble that was caused by keeping interest rates at 1 percent in 2003-2004.” Corsi wrote.
“The stock-market bubble will most certainly burst when interest rates rise, as they inevitably will,” Corsi wrote, “both to fight the increasing risk of hyperinflation and to maintain the needed incentive for foreign nations to lend the U.S. Treasury the hundreds of billions of dollars monthly that will be needed to float yet another $1 trillion federal budget deficit in 2010.”
If this isn’t enough to piss you off, I don’t know what is.
Tags: Government
