Paying Up

Doyle Lonnegan: "You're boss is quite a card player, Mr Kelly. How does he do it?"
Johnny Hooker: "He cheats."
--The Sting

People viewed Friday's payroll numbers with optimism as the bottom line job losses number was less than expected. The data collection and analysis process behind this series is so tortured that it is mostly meaningless.

According to the BLS release, employment fell by 'only' 345,000 (over half a million was expected). However, the infamous 'birth/death' model added a hypothetical 200k+ jobs into that estimate.

The official unemployment rate upticked to 9.4%, a high water mark thus far for this recession. My sense is that this number is headed significantly higher despite all attempts to massage it lower.

During the Depressionary 30s the unemployement rate hovered at 20% for much of the decade. The official unemployment rate number today is not determined in the same way we did it then. For example, we do not include 'discouraged workers' (those who are not actively seeking employment today altho they are qualified.

Were we to add all those omissions back into the series today, folks would be surprised how much worse the data would look. Of course, this is the reason why we don't do it.

Before this period is over, we may see 'old way' unemployment at or above 20%. We're closer now than you might think.