I noted several days ago on Shoebat.com that based upon my estimations, the current numbers of an approximate 15% unemployment rate were undercalculated. I said the likely numbers were over 20% and possibly 25% but was unable to confirm it.
It is with regret I have to announced that the numbers I suspected were the correct ones are correct indeed, as Zero Hedge reports the actual unemployment numbers are about 25% to 27%.
While it is true that what the BLS reported that the April unemployment rate (UR) was less than expected (14.7% versus consensus of 16.0%) and the drop in payroll employment of 20.5 million was also less than the 22.0 million expected, Standard Chartered bank has calculated that adjustments to the headline unemployment rate push the effective number of unemployed to 42 million and the effective UR rate to 25.5%, higher even than the U-6 underemployment rate of 22.8%. Worse, if one treats underemployed in line with the U-6 methodology, the true April unemployment number would rise to an mindblowing 27.5%.
How does one get these numbers? As the bank’s chief FX strategist Steve Englander explains, start with the 23.1 million unemployed as published by BLS. To this add 8.1mn people who have dropped out of the labor force since February (previously the labor force had been growing steadily, so these are likely unemployed).
Add back 7.5MM workers classified as ‘employed but not at work for other reasons’ – BLS states that these workers are likely misclassified as employed, when they are in fact unemployed. Involuntary part-time work for economic reasons has gone up by 6.6MM and we treat these as half-unemployed (i.e., a contribution of 3.3MM).
This totals almost 42 Million effectively unemployed. Keep the civilian labor force denominator at February’s 164.5 million, which results in a 25.5% estimate for effective unemployment, and if Englander treated involuntary part-time workers as completely unemployed, the resulting unemployment rate would be at 27.5%. (source)
I wish I did not have to report these numbers.
I wish they were wrong.
One in four people in the workforce is out of a job- this is a horrible thing. It also cannot be expected to improve. The US is now at Greek level unemployment rates. As this continues, it is going to mean the complete financial devastation of many people.
This is not the time however to focus on who is right or not right. Rather, it is to take this information as a warning for yourselves and what to do.
Get your personal finances in order. The time is already past, but there is still time for those who have a job to make positive changes to help themselves and their neighbors.
Please, take care of yourselves and your families. You will need to as things get much, much harder in the years to come. This is not the end of the troubles but the beginning of them.