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The Unemployment Rate Is Closer to 15% Than 7.7%
Raymond Richman, 3/10/2013

Employment reports dominate the economic news on Thursday and Friday and sent the Dow Jones average to record heights. While the employment news was labeled as encouraging by the media, a look at the numbers was not very encouraging at all. 

The first report, the number of initial claims for unemployment, was declared to be encouraging because the seasonally adjusted number of initial claims was positive, having fallen by 7,000 during the week ending March 1, 2013. To the contrary, the actual number of initial claims during that week increased by 23,198.

Two other reports were equally negative. The first was widely ignored. It showed that the trade deficit worsened in February. The third report was widely declared to show economic growth. It reported that over 200,000 new  jobs were created in February. The bad news was the continued decline of manufacturing jobs, the real key to economic growth. Taking into consideration those no longer looking for a job who are not counted as unemployed and those employed part-time involuntarily, the real unemployment rate is fifteen percent not 7.7 percent as officially reported.

Following is what the Bureau of Labor Statistics actually reported about initial unemployment claims in the week ending March 1, 2013: 


In the week ending March 2, the advance figure for seasonally adjusted initial claims was 340,000, a decrease of 7,000 from the previous week's revised figure of 347,000. The 4-week moving average was 348,750, a decrease of 7,000 from the previous week's revised average of 355,750....


The advance number of actual initial claims under state programs, unadjusted, totaled 333,389 in the week ending March 2, an increase of 23,198 from the previous week. There were 368,433 initial claims in the comparable week in 2012."

The media consistently report only the seasonally adjusted data, an artificial figure, instead of the unadjusted data. They should do both. Why do they not report both? Is it laziness or do they report only what the administration wants them to?

Trade Deficit Grows

Other important economic news during the week was reported by Bureau of Economic Analysis and largely ignored. Pres. Obama has stated on numerous occasions that the administration is targeting increased exports, especially manufactured goods. But the only exports that are increasing and show every evidence of continuing to increase are fossil fuels, coal, petroleum, and natural gas. And the administration, taking its lead from the radical environmental lobby is doing everything in its power to impede the production of fossil fuels. That is the Environmental Regulatory Agency’s principal activity.

The Department of Commerce announced today that total January exports of $184.5 billion and imports of $228.9 billion resulted in a goods and services deficit of $44.4 billion, up from $38.1 billion in December, revised. January exports were $2.2 billion less than December exports of $186.6 billion. January imports were $4.1 billion more than December imports of $224.8 billion.

Exports of goods decreased $2.0 billion to $130.8 billion, and imports of goods increased $3.6 billion to $192.5 billion.  Exports of services decreased $0.1 billion to $53.7 billion, and imports of services increased $0.5 billion to $36.4 billion.

The employment and unemployment data were reported on Friday, March 8, 2013. The headlines were 266,000 new jobs were reported in February. The news was reported by the media as vindicating the administrations claims of economic improvement. Not only is the initial unemployment claims data inconsistent that headline, but the introduction to the report does not mention that jobs decreased in the manufacturing sector. What the data in the report shows is that:

  1. 8 million workers are working part-time for economic reasons,
  2. 2.6 million were “marginally attached”, i.e., not actively seeking jobs in February,
  3. 885,000 workers were “discouraged” from seeking employment, and
  4. 1.7 million, formerly in the labor force, were not seeking work for personal reasons.

If the first three categories were added to the 12 million workers officially unemployed, and counted as unemployed or partially unemployed, the number is 23.5 million unemployed or under-employed. The unemployment rate becomes not 7.7 percent but 15.1 percent.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]