So prior to 1994, the numbers reported were the same as in the U6 unemployment marker (unemployment rolls + those discouraged from seeking work, part time but underemployed, or just plain not in the workforce anymore for one reason or another), but after 1994, they invented U3, which is the number of people current on state-sponsored unemployment, about 8.5% right now. This does not include people on extended federal unemployment. Using the rules prior to 1994, U3 would be the same as U6, or 15.6%. Almost twice the headline number.
And that’s not the scary part. The scary part is U6 is rising at a faster rate than U3, so it’s actually getting worse than it seems faster than it seems, if you’re only paying attention to mass-media headlines. The people in U6 are no better off and sometimes worse off than the people in U3, just as non-contributory to growth, but they’re not counted to make things look rosier in press releases. U6 is out-accelerating U3 by .4% a month. At the current rate of U6 growth, by the time U3 is at 13% U6 will be at 25% – and I see no reason for this not to happen (sooner rather than later) as we are now losing three-quarters-million jobs a month AND ACCELERATING.
Holy fucking shit son, start your garden. 25% of the American populace unemployed or underemployed (earning less than it takes to survive) means 80 million Americans unemployed. There is no way that with these people earning little money that our GPD is going to go anywhere but down the freakin tubes. With 4% (headline, U3) heading into this Depression at the end of 2007 and 5% GPD growth, well, I would expect a large chunk of 20% would be taken out of US growth. These people will get wellfare and unemployment for a while, so they’ll still contribute, just the bare minimum available to get by. And a vanishingly small fraction of these people will be taking out loans (that they will pay back, anyway), so kiss that growth engine goodbye.
I think we’re all now sub-sub-prime.
Tags: depression 2.0