“Shadow Government Statistics” is a great web site  that makes it it’s business to calculate various government statistics in a way that they believe is more accurate or appropriate. Often this involves going back in time and using methods that were used in the past; arguable this leads to a better presentation of the numbers. This is what they posted today for unemployment;

The explanation is given as follows;

SGS stands for “Shadow Government Statistics”. The one that all the fuss today was about is the one in red. The one above that (in grey) is reported publically as well but is down played by the media. The real unemployment rate, according to the authors of this website is the blue one, at the top. It is more in line with unemployment rates all over the world. In case it is not entirely clear what a discouraged worker is , here is the definition;

In Canada if you are unemployed AND collecting EI (Employment Insurance) you are required to report every two weeks that you are still available to work. No questions are asked with respect to what you might have done in order to obtain work. After EI stops, usually quite soon and that is assuming that you get it in the first place, no reporting whatsoever occurs. How they do it in the US I have no idea but if for statistical reasons you can exclude anyone who has not stated an intent to look for just 4 weeks, than clearly the result becomes almost meaningless. When adjusted for this factor (the blue line) unemployment has actually increased on balance for the past 2 years, and is running above 22%.

As the US has the highest level of incarceration of any country in the world and growing, and as most other countries are less than 1/4 of that, one could further argue that, provided a reasonable proportion of those in jail would be unemployed if they were not (I have no idea if this is true!) unemployment might even be a little higher.

Most European countries run at incarceration rates that are about 1/10 of those in America. When making  a comparison perhaps some adjustment should be made.

This mornings unemployment rate was announced as having dropped 2/10 of a percent and now stands at 9.7% (compared to 8.1% in Canada). However, according to ShadowStats.com the stats are massaged to show a way too flattering result. If, again according to them, the old way of calculating this statistic was used, that is if the longer term unemployed were not simple ignored, the rate would be as high as 22%. The U-6 rate is actually reported and stands at 16.6%. Over and above that the US has the doubtful distinction of having the largest proportion of any civilized country of their citizens behind bars ( hopefully they do not also receive Old Age Security on top of their room and board as they do in Canada). Arguable this also flatters the situation even more. Anyway, with 1/5+ of your population not working it is not clear how this recovery can be self sustaining.

All morning the whole world seems to be waiting for the unemployment number, not the Canadian but the US one. This one is supplied by the Dept. of Labor and is notorious for the enormous revisions and non factual basis. This time the big number went down to 9.7%, but the absolute number over the last 2 years went up from 7.2 mln to 8.4 mln, an additional 1.2 mln, but that was expected so it did nothing. A loss of 75,000 in the housing sector did surprise but could be explained by snow in Florida. The initial reaction of the market by way of the futures was positive even though Paris made new lows before regaining its composure.

      We would prefer to look at these things from a macro economic perspective, or , if you wish , from 30000 feet. Better yet we looked at Shadow Government Stats, a website that does things the way they were done in the 80-ties. Here is the chart again.

Notice that even by the more correct “official” U-3 and U-6 stats we are already above 17%