http://www.financialweek.com/apps/pbcs.dll/article?AID=/20090206/REG/902069980/-1/FWDailyAlert01
Actual unemployment rate 13.9%: Merrill Lynch
Counting the ranks of “underemployed” as a result of cutbacks on hours,
the unofficial rate hit the highest level in at least 15 years,
according to economist David Rosenberg
By Ronald Fink
February 6, 2009 ET
A Merrill Lynch analysis of the non-farm payroll numbers released on
Friday makes for disquieting reading, to say the least.
The analysis by North American economist David Rosenberg indicates that
the actual unemployment rate, while normally higher than the official
one by the Bureau of Labor Statistics, hit a level not seen since at
least 1994. The good news: Inflation is not much of a threat as a result.
As Mr. Rosenberg explained, what the official unemployment rate misses
is the vast degree of ‘underemployment’ as companies cut back on the
hours that people who are still employed are working. Those hours have
declined 1.2% in the past twelve months.
The BLS still counts people as employed if they are working part-time,
but the number who have been forced into that status because of slack
economic conditions has ballooned nearly 70% in the past year, according
to the study. Mr. Rosenberg said was that was a record growth rate for
the 15-year period he has studied.
When that amount of slack in employment is taken into account, Mr.
Rosenberg found that the ‘real’ unemployment rate has actually climbed
to 13.9%, an all-time high for the period he studied, and up from 13.5%
in December and 11.2% a year ago.
As a result, the economist said worries that the federal deficit will
lead to inflation anytime soon are misplaced.
“With this amount of excess capacity in the jobs market, and keeping in
mind that the inflation process is dominated by the direction of labor
costs, it is tough to believe that inflation at this point is anything
but a far-in-the-distance prospect,” Mr. Rosenberg wrote. “A present-day
reality it is not.”
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