Countdown 85 days

THE ECONOMIC PICTURE (BLS AND CPI)    

It’s the economy and things aren’t at all rosy. The next great recession is upon us. The ending of aid for unemployed workers “would hurt the economy nearly as badly as the virus” says Paul Krugman a noted economist. The economy is reeling with the ending of the eviction moratoriums and the freeze on foreclosures expiring the times look bleak for those who have no lifeline left. In January the majority of households had less than $400 cash and were living paycheck to paycheck.

Without the government help people will be forced to live in their cars parked at parks and soup kitchens will spring up to feed the masses of people down all due to the lack of initial response to the virus by the Trump Administration. 

The Consumer Price Index (CPI) economic statistics are bleak in critical areas.  From May 2020 to June 2020 the prices of meat, poultry, fish and eggs were up by 10% for the one month increment.  Annually that’s 120% now that’s what I call inflation. All food items combined were up by 4% in that same month or 48% annually. Food items make up 14.3% of the CPI. Shelter, which makes up 33.6% of the CPI, was up monthly by 2.2% that’s a 26.4% annualized increase.   The CPI did register a net lowering of energy prices, which make up only 5.7% of the CPI and transportation services, 5% of the CPI, were lower primarily due to lower airline prices.  Food is key. Everyone requires food even if unemployed and homeless. Food seems to be on the rise with noticeably higher prices for meats and poultry items. Last month I paid $12 for a rack of ribs, this month for the same weight ribs were $18. 

Unemployment data for July has been released by the Bureau of Labor Statistics (BLS) and the official rate is 10.2% unemployed. I view this as a useless statistic, considering it overlooks a significant portion of the workforce that is no longer seeking employment knowing there are 5 million jobs available and 32.4 million unemployed.  In January 2020 there were 159 million workers according to the BLS. The current numbers of employees in the work force is shown by the BLS to be 143,5 million in July 2020. That is a shrinkage of the workforce of over 10%.

Looking at the data provided by the BLS, I did my own analysis of the July BLS labor report. Using their own published data, I find some interesting things. The following are 3 paragraphs are a direct lift from the July BLS data.

Among the unemployed, those who were jobless less than 5 weeks increased by 364,000 to 3.2 million in July, and the number of persons jobless 15 to 26 weeks rose by 4.6 million to 6.5 million. By contrast, the number of unemployed persons who were jobless 5 to 14 weeks fell by 6.3 million to 5.2 million. The number of long-term unemployed (those jobless for 27 weeks or more), at 1.5 million, was little changed over the month. (See table A-12.) The labor force participation rate, at 61.4 percent, changed little in July, following increases in May and June. Total employment, as measured by the household survey, rose by 1.4 million in July to 143.5 million. The employment-population ratio rose by 0.5 percentage point to 55.1 percent but remains lower than in February (61.1 percent). (See table A-1.)

In July, the number of persons not in the labor force who currently want a job declined by 463,000 to 7.7 million; this measure is 2.8 million higher than in February. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job. (See table A-1.)

Total unemployed using only the data above you can see where the BLS obtained their 10.2% published rate of unemployment for July using the first 2 paragraphs. Now look at the last paragraph published in the same BLS document.

Individuals that want a job but are not counted as unemployed. Hmm… what would happen to the great unemployment numbers provided by the BLS if we include these individuals. The current numbers of unemployed now goes to 14.5% + 7.7% or equal to 22.2 million unemployed. There are also the discouraged and marginally attached to the workforce, which total 1 million that are not counted as unemployed yet are. That makes the total 23.2 million. Using the BLS numbers in the workforce at 143.5 million, the unemployment numbers now look like 16.2%. 

The paragraph below shows an additional category of the labor force that is not included in the above data provided by the BLS.

The number of unemployed persons who were on temporary layoff decreased by 1.3 million in July to 9.2 million, about half its April level. In July, the number of permanent job losers and the number of unemployed reentrants to the labor force were virtually unchanged over the month, at 2.9 million and 2.4 million, respectively. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.) (See table A-11.)

By adding the 9.2 million to the 23.2 million It is estimated that the actual numbers of available workers or unemployed and under-employed in the United States is 32.4 million people, as shown in the BLS data. The 9.2 million in the above paragraph is not included in the 16.2% or the 10.2% official rate. With a work force of 143.5 and 32.4 million available the rate is 22.6% available workers unemployed. This is the number I call the total misery number and includes temporary and migrant workers and those under employed and part time seeking full time employment. I can mess with numbers too. (The tables A-1, A-11 and A-12 referenced above compares monthly data by sector and groups.) Even if you used the full employment of 159 million against the 32,4 million the value is still over 20%.

Official unemployment rate = 10.2%, adjustments for those that want a job but cant find and are discouraged rate = 16.2%, add the temporary layoffs (which may or may not be permanent) and the misery index is 22.6% or 20%, which is more like how the economy actually feels.