7 ms·

As a complete layperson I might be out of my depth, but is that 5% unemployment realistic? If I remember correctly they don't count people who have been unemplo

by gph 11y ago

As a complete layperson I might be out of my depth, but is that 5% unemployment realistic? If I remember correctly they don't count people who have been unemployed long-term. There's a lot of people who don't work; whether they collect disability/welfare, live off relatives, or make money through the grey/black markets I don't think the job market has really recovered nearly as much as a lot of people think. And a lot of those jobs are part-time or low wage. Perhaps that's anecdotal from the impression I get, but it doesn't seem like their model takes any of that into account. Even without inflation it doesn't seem like the people I'm around (mostly middle to lower class) have all that much extra spending money laying around these days. If everyone was making more money I'm sure inflation would rebound, but as it is most the new money the Fed has been pumping into the economy seems to be going largely to the upper class.

SCAQTony 11y ago
No, 5.3% unemployment number is cooked. Even the BLS stats say 10.3% & that's probably gamed too. http://www.cnbc.com/2015/09/04/-the-real-unemployment-rate.html http://www.cnbc.com/2015/09/04/-the-real-unemployment-rate.h... …
- jjoonathan 11y ago
  Understand the definitions of "unemployed" here (U1-U6): https://en.wikipedia.org/wiki/Unemployment#United_States_Bureau_of_Labor_statistics https://en.wikipedia.org/wiki/Unemployment#United_States_Bur... Look up the time-series here: https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Unemployment_measures.svg https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Un... It's a little silly to say that one of these measures is "cooked" while using as evidence an alternative metric that was measured and published by the same agency with the explicit understanding that the two metrics measured different things.
- randomname2 11y ago
  Not to mention the plummetting labor force participation rate, in the US at least (some other countries do better): http://charleshughsmith.blogspot.com/2015/12/why-has-labor-participation-rate-plunged.html http://charleshughsmith.blogspot.com/2015/12/why-has-labor-p...
- dragonwriter 11y ago
  Obviously, you are using U-6 instead of the headline rate, and using non-current numbers; U-6 is now 9.9% (with seasonal adjustment, 9.6% by the raw numbers.) But while debating about which measure is "real" unemployment is fun, I guess, U-6 follows the same trend as the headline U-3 measure, so while the number is different, the relation to different points in the past is basically the same whichever measure you look at. http://www.bls.gov/news.release/empsit.t15.htm http://www.bls.gov/news.release/empsit.t15.htm
fiatjaf 11y ago
http://www.shadowstats.com/ http://www.shadowstats.com/
- JoBrad 11y ago
  I think he's using BLS figures, but emphasizing the U-6 figure, for instance, instead of U-3 figure. I don't have a subscription to compare numbers, but is that correct?
  - jjoonathan 11y ago
    Here's a description of what they say they are doing: http://www.democraticunderground.com/1002696672 http://www.democraticunderground.com/1002696672 It seems reasonable. Of course, there's a cynical interpretation: they are integrating a small but positively biased noise source (e.g. due to groups that seem like they ought to add up but don't) to obtain and monetize a politically convenient quadratic. Hard to tell. EDIT: removed rant about the business model of this and similar publications EDIT2: replaced my own analysis with a link to one which is deeper and more concise
- Zigurd 11y ago
  The key thing that this shows is that U3 has come down but U6 hasn't. In other words, U3 and U6 have diverged, and only one has improved. That's a pretty good reason to doubt what U3 is telling us.
- panarky 11y ago
  Egads, please don't spread unfounded conspiracy theories on HN. Shadowstats is to economics as 911 truthers are to law enforcement[1]. Besides, independent attempts to measure inflation correspond closely to official numbers in the US. Witness MIT's Billion Prices Project, for instance. [1] http://www.bloombergview.com/articles/2014-07-21/the-inflation-truther-crank-index http://www.bloombergview.com/articles/2014-07-21/the-inflati... [2] http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/
  - fiatjaf 11y ago
dragonwriter 11y ago
> If I remember correctly they don't count people who have been unemployed long-term. Yes, they do. The thing the headline unemployment figure doesn't count are those "marginally attached to the labor force", who are no longer looking for work -- but those are counted in other measures that BLS collects besides the headline measure, including the subset of marginally attached known as "discouraged workers" bumps the rate from 5.0% to 5.4%, counting all marginally attached workers gets it up to 6.1%. (Nov. 15 data, with seasonal adjustment.) http://www.bls.gov/news.release/empsit.t15.htm http://www.bls.gov/news.release/empsit.t15.htm
- roymurdock 11y ago
  I'm interested to hear whether you think it is wise to raise the short term interest rate with the economy the way it is now. You are clearly on top of the positive economics of the situation, but I don't recall you making many normative statements in the past. You strike me as well versed in economics and quite rational and unbiased and I would value your opinions/insights.
  - dragonwriter 11y ago
    I think the problems we have now are not really responsive to monetary policy -- what we are really need is better fiscal policy; unfortunately, we have a Congress that is completely disinterested in addressing economic problems by fiscal stimulus. Qualitatively, I'd be concerned about a rate increase having a negative impact on employment (the unemployment rate isn't bad now, but wages haven't done well, and the price of capital going up in those conditions would squeeze wages and employment further.) OTOH, one consequence of increasing income inequality and the stagnant lower end during the present expansion (and the past cycle, as well) could have made it more likely to be in a position where rate hikes to combat inflation are indicated and where rate hikes will lead to negative changes (rather than just slowing progress) on the employment front. Quantitatively, I'm not familiar enough with relevant models to have a firm opinion one way or the other on a rate hike and the relative employment vs. inflation risks.
    - 11y ago
carsongross 11y ago
The unemployment numbers are a joke. Look at employment ratios for a better sense of what things look like: https://research.stlouisfed.org/fred2/series/EMRATIO https://research.stlouisfed.org/fred2/series/EMRATIO
- jjoonathan 11y ago
  Much of that is due to demographics (retiring boomers, people staying in school longer) which is what the other figures try to take into account. Details: https://www.fas.org/sgp/crs/misc/R44055.pdf https://www.fas.org/sgp/crs/misc/R44055.pdf See page 11 (prime age employment-population ratio) if you want an EPR that accounts for this trend.
panarky 11y ago
The Federal Reserve can directly control short-term rates, but long-term rates are determined by expectations of future short-term rates. Since the global economy is still quite weak, raising rates now increases the probability of reduced economic growth, higher unemployment and future rate cuts. Prediction 1: If short-term rates increase tomorrow, then investors will anticipate this and drive long-term rates lower. Much of this is already priced in, as long-term rates fell today with 30-year treasurys yielding less than 3%. Prediction 2: Know-nothing analysts on cable news will be shocked to see long-term rates fall when short-term rates rise.

by gph 11y ago

SCAQTony 11y ago

No, 5.3% unemployment number is cooked. Even the BLS stats say 10.3% & that's probably gamed too. http://www.cnbc.com/2015/09/04/-the-real-unemployment-rate.html http://www.cnbc.com/2015/09/04/-the-real-unemployment-rate.h... …

jjoonathan 11y ago
Understand the definitions of "unemployed" here (U1-U6): https://en.wikipedia.org/wiki/Unemployment#United_States_Bureau_of_Labor_statistics https://en.wikipedia.org/wiki/Unemployment#United_States_Bur... Look up the time-series here: https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Unemployment_measures.svg https://en.wikipedia.org/wiki/Unemployment#/media/File:US_Un... It's a little silly to say that one of these measures is "cooked" while using as evidence an alternative metric that was measured and published by the same agency with the explicit understanding that the two metrics measured different things.
randomname2 11y ago
Not to mention the plummetting labor force participation rate, in the US at least (some other countries do better): http://charleshughsmith.blogspot.com/2015/12/why-has-labor-participation-rate-plunged.html http://charleshughsmith.blogspot.com/2015/12/why-has-labor-p...
dragonwriter 11y ago
Obviously, you are using U-6 instead of the headline rate, and using non-current numbers; U-6 is now 9.9% (with seasonal adjustment, 9.6% by the raw numbers.) But while debating about which measure is "real" unemployment is fun, I guess, U-6 follows the same trend as the headline U-3 measure, so while the number is different, the relation to different points in the past is basically the same whichever measure you look at. http://www.bls.gov/news.release/empsit.t15.htm http://www.bls.gov/news.release/empsit.t15.htm

fiatjaf 11y ago

http://www.shadowstats.com/ http://www.shadowstats.com/

JoBrad 11y ago
I think he's using BLS figures, but emphasizing the U-6 figure, for instance, instead of U-3 figure. I don't have a subscription to compare numbers, but is that correct?
- jjoonathan 11y ago
  Here's a description of what they say they are doing: http://www.democraticunderground.com/1002696672 http://www.democraticunderground.com/1002696672 It seems reasonable. Of course, there's a cynical interpretation: they are integrating a small but positively biased noise source (e.g. due to groups that seem like they ought to add up but don't) to obtain and monetize a politically convenient quadratic. Hard to tell. EDIT: removed rant about the business model of this and similar publications EDIT2: replaced my own analysis with a link to one which is deeper and more concise
Zigurd 11y ago
The key thing that this shows is that U3 has come down but U6 hasn't. In other words, U3 and U6 have diverged, and only one has improved. That's a pretty good reason to doubt what U3 is telling us.
panarky 11y ago
Egads, please don't spread unfounded conspiracy theories on HN. Shadowstats is to economics as 911 truthers are to law enforcement[1]. Besides, independent attempts to measure inflation correspond closely to official numbers in the US. Witness MIT's Billion Prices Project, for instance. [1] http://www.bloombergview.com/articles/2014-07-21/the-inflation-truther-crank-index http://www.bloombergview.com/articles/2014-07-21/the-inflati... [2] http://bpp.mit.edu/usa/ http://bpp.mit.edu/usa/
- fiatjaf 11y ago

dragonwriter 11y ago

> If I remember correctly they don't count people who have been unemployed long-term. Yes, they do. The thing the headline unemployment figure doesn't count are those "marginally attached to the labor force", who are no longer looking for work -- but those are counted in other measures that BLS collects besides the headline measure, including the subset of marginally attached known as "discouraged workers" bumps the rate from 5.0% to 5.4%, counting all marginally attached workers gets it up to 6.1%. (Nov. 15 data, with seasonal adjustment.) http://www.bls.gov/news.release/empsit.t15.htm http://www.bls.gov/news.release/empsit.t15.htm

roymurdock 11y ago
I'm interested to hear whether you think it is wise to raise the short term interest rate with the economy the way it is now. You are clearly on top of the positive economics of the situation, but I don't recall you making many normative statements in the past. You strike me as well versed in economics and quite rational and unbiased and I would value your opinions/insights.
- dragonwriter 11y ago
  I think the problems we have now are not really responsive to monetary policy -- what we are really need is better fiscal policy; unfortunately, we have a Congress that is completely disinterested in addressing economic problems by fiscal stimulus. Qualitatively, I'd be concerned about a rate increase having a negative impact on employment (the unemployment rate isn't bad now, but wages haven't done well, and the price of capital going up in those conditions would squeeze wages and employment further.) OTOH, one consequence of increasing income inequality and the stagnant lower end during the present expansion (and the past cycle, as well) could have made it more likely to be in a position where rate hikes to combat inflation are indicated and where rate hikes will lead to negative changes (rather than just slowing progress) on the employment front. Quantitatively, I'm not familiar enough with relevant models to have a firm opinion one way or the other on a rate hike and the relative employment vs. inflation risks.
  - 11y ago

carsongross 11y ago

The unemployment numbers are a joke. Look at employment ratios for a better sense of what things look like: https://research.stlouisfed.org/fred2/series/EMRATIO https://research.stlouisfed.org/fred2/series/EMRATIO

jjoonathan 11y ago
Much of that is due to demographics (retiring boomers, people staying in school longer) which is what the other figures try to take into account. Details: https://www.fas.org/sgp/crs/misc/R44055.pdf https://www.fas.org/sgp/crs/misc/R44055.pdf See page 11 (prime age employment-population ratio) if you want an EPR that accounts for this trend.

panarky 11y ago

The Federal Reserve can directly control short-term rates, but long-term rates are determined by expectations of future short-term rates. Since the global economy is still quite weak, raising rates now increases the probability of reduced economic growth, higher unemployment and future rate cuts. Prediction 1: If short-term rates increase tomorrow, then investors will anticipate this and drive long-term rates lower. Much of this is already priced in, as long-term rates fell today with 30-year treasurys yielding less than 3%. Prediction 2: Know-nothing analysts on cable news will be shocked to see long-term rates fall when short-term rates rise.