The REAL unemployment number

Desperate for some good news on the unemployment situation, the administration and state-run media were happy to report the latest figures from the Bureau of Labor Statistics that claimed employers added 162,000 jobs in March – the most in 3 years. Somehow the official unemployment rate remained at 9.7% for the third month in a row. Yet, as this article from Yahoo Finance states, the real numbers don’t paint a very rosy picture of the real unemployment situation.

The Labor Department said employers added 162,000 jobs in March, the most since the recession began but below analyst’s expectations of 200,000. This number includes the 48,000 temporary workers hired for the U.S. Census.

According to estimates by ADP, a payroll company, the private sector lost 23,000 jobs in March. This estimate does not include government employees. Regardless of which numbers are correct, we have bigger fish to fry.

However, the real unemployment rate, even by the standards of the Bureau of Labor Statistics, is much higher. The U-6 unemployment number, as the real data is called, is at 17.5%, within 0.5% of its all-time high. This figure includes discouraged workers who’ve stopped looking, marginally attached workers, and workers that are forced to work part-time because full-time jobs are not available.

The article goes on to report that the stock market has responded positively to the false unemployment numbers. They offer the following explanation:

The discrepancy between the stock market (NYSEArca: VTI – News) and the actual economy is as obvious as an approaching freight train.

The Dow Jones, S&P 500, Nasdaq and virtually all other indexes have rallied while the economy has only improved marginally. What caused this massive rally from the March 2009 lows?

After a 55% drop from October 2007 to March 2009, the indexes were extremely oversold and nearly everyone involved in investing had turned bearish, according to some polls, 4 out of 5 investors were bearish and sold stocks.

Hopefully this meager recovery will spur some real job growth in the private sector.

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