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The Noise on Jobs Keeps Fed Guessing

Wall Street Journal Original article ›

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The complex picture presented by the surveys of the Bureau of Labor Statistics on unemployment and making sense of what they mean

01/07/2012

The Department of Labor's Bureau of Labor Statistics has two surveys the payroll survey of 400,000 establishements is the emplyer survey and gives the number of jobs added in nonfarm payrolls. The other survey is the Household survey which is based on 600,000 households and gives the unemployment rate. The number of jobs added in the employer survey of payrolls is revised sometimes by hundreds of thousands. The unemployment rate is based on the number of people looking for jobs. If people are discouraged and stop looking the unemployment rate may look better, and conversely if people feel encouraged and start looking the rate can be worse. The unemployment rate can also look better even when jobs are coming in at less than the 125,000 jobs a month that account for population growth to keep the unemployment rate stable.

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Whats the real U.S. unemployment rate in November 2011, 11% or less than 9%? Its 11%!

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U.S. government statistics don't count long term unemployed who have stopped looking for work. Ed Luce of the Financial Times, says the figure is about 11% for the U.S. in Nov. 2011, when you include these people, which is the right number to look at. Also relevant are the underemployed, including this group brings the rate closer to 20%, reflecting the real situation in the U.S.

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